Income Recongnition!

499 views 2 replies

Kumar Gaurav

Going...to be C.A soon...

1624 Points Posted on 27 July 2010

Dear All

Will u please guide me on the accounting trartment of Income & Expenditure of an Training institute.

Suppose we got 50k in april month on account of Registration fee & issued the prospectus to the students. then in the month of april what would be my income is it Rs. 50k ??? and accounting entry???

Suppose we got 40k in May month on account of admission fee from the students but nothing services provided to them . then in the month of May what would be my income is it Rs. 40k ??? and accounting entry???

Suppose then, we got 80k in June month on account of Batch start fee from the students and started providing classes/services to them and will claim 50k from the students every month till Feb-2011then every month what would be the income in the books?? and a/c entries

Replies (2)

Guest

The question arises whether the registration and admission fees is refundable or non-refundable? Whatever the case may be, for income tax purposes, the entire registration, admission and batch starting fees will have to be accounted for as income in the same F.Y. For other purposes, if the registration and the admission fees have been charged for the current year only then these will have to be accounted for as income received but not due untill the batch starts. Once the batch starts, it can be transferred to a regular income account along with the batch starting fees. In case the registration and/or the admission fees has been taken for a period beyong one F.Y. say for 3 years(as is usually done in case of institutes) the entire reg. and admission fees will have to be treated as defferred income and will be proportionately recognised as income in P/L a/c over 3 years. This is as per my view. Please do tell if correct or wrong??