Quick Question on AC's for Annual Return

Equanimity

Hi all
I wonder if anyone could clarify something for me - am not an accountant type clearly.
Am self employed and preparing my accounts for my annual return.
When you are calculating your total income for the year, is that for billings e.g. invoices issued within the year or payments in.
Say in December I worked on a project, issued an invoice but payment was received in January - does that count in December or January?

Thanks in advance
E

dbran

That counts as December

Equanimity

Thanks brilliant thanks So it's based on billings rather than bank receipts!

Thanks again

E

dbran

Hi

Its based on the accruals concept in that the income is recognised when the cashflow (and the relevant cost) becomes likely to arise and not just when it is invoiced. This is usually when the work is actually done and not necessarily when when the work is invoiced.

If this was not the case then you could simply not invoice for stuff until after the year end and thus manipulate the final profit figure to your own requirements.

Kind Regards

dbran

Equanimity

That's great, thanks again for your help!
E