When a customer requests that booking be postponed without a down payment, the purpose is to order but still offer other options. This is high risk because the customer will not lose money and if he finds a similar product at a lower price or better packaging, it will replace their vendor. Therefore the vendor needs to order the product with the terms of payment in advance even if the customer does not make a transaction, the vendor will not lose all money with these conditions.
<h2>Further Explanation
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Prepaid Income is income received in advance but has not yet been received.
Income must be recorded in the accounting period in which the income was earned. Therefore, income received in advance may not be shown as income in the accounting period in which payment is received. However, prepaid income must be presented in the accounting period where goods or services related to prepaid income have been made.
Income Received in Advance is an accounting concept that refers to payments that have been received, but the asset has not been fully sent.
The company receives payments in the future but provides goods or services provided in the future. Prepaid Income is positioned in the balance sheet as a liability (such as debt).
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Details
Grade: Middle School
Subject: Business
Keyword: income, customer, prepaid
