Can any one explain what is the difference between cash payment received and Progress Payment Received by giving some detailed numerical examples
CA Tarkeshwar
(job)
(77 Points)
Replied 08 December 2010
dear sir
so far i can interpret the diff. , is as follow
cash payment received means receipt of payment in cash which may or may not be any basis. It may be in form of advance receipt or receipt during continuation of work or after the completion of work or may be a fixed amount of installment as agreed between the parties concerned
But when we talk about progress payment received, there must be a nexus with the performance of work contract ( including professional and technical work). There may be a calculation of amount to be received or paid as a percentage on the work certified or estimated work completed as agreed by the parties. So there must be a basis of calculation of payment.
for example if a contractor has untertaken a project to build a residential complex for Rs. 1 cr. and project should be completed within a period of 1 year. Payment is decided as progress billing and payment within 1 week then
the contractor will raised bill quarterly/monthly (say) on the basis of work completed by him, may be expressed in % terms, then after satisfaction of the contractee and engineer the % completion of project is assessed and payment to the contractor is appoved and paid, such payment is made 4/12 times as the case may be, during the project period. Such type of payment may be called as progess payment. here payment is decided as per the status of work
cash payment is simple and generally fixed in amount or lump sum, may be seen in hire purchase transaction, lease transaction, financial arrangement no matter how the asset/money is used.
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