Work in Progress - tracking in SAGE

Question

To properly track revenues per accounting standards, revenue should be recognized when the expense is incurred. In other accounting systems I've used what happens is if an employee works a hour on September 1 that will cost the company $20 but will be billed out for $80, the cost of $20 and the associated revenue of $80 will be recorded in the general ledger dated September 1, resulting in matching of revenue and expense. This is also known as recording the revenue against Work in Progress (WIP). 
 I can't figure out a way in SAGE to replicate this and I'm wondering if anyone has any ideas. I can see how to record timeslips and pull these into payroll. and from there you can control the way the dates hit the system. The issue becomes when doing the invoicing from that same timeslip, it wants to create the journal entry in sage as of the invoice date. This could then result in the revenue being dated (ie recognized) 2 months after the expense was recorded. 
 Any thoughts? 
 thanks, 
 Susan

Roger L · Accepted Answer

Susan, you are correct re. recognizing partial revenue, cost, wages, etc 
 this is done with accrual entries, so if I'm working on a project this month, and I've incurred 1/2 the cost, I should recognize half the revenue - so I will create a JE to accrue the revenue on the last day of the month (Sep), and a 2nd JE to reverse the accrual on the first day of the next month (Oct). So that when I invoice the customer in Oct, that the income statement for each month will show 1/2 the revenue 
 the accrual process also applies to WIP cost, wages, etc 
 a net search for "month end accruals" provides lots of info, ie. 
 www.ehow.com/how_8667848_prepare-month-end-accruals.html 
 www.ehow.com/info_10022593_end-month-wage-accruals.html

RandyW · Answer

If this is a contract situation where 
 the job is cost plus, 
 every hour is billable, therefore 
 the revenue is earned as soon as there is performance, 
 which means that as each hour is worked, 
 there is a corresponding earned income amount. 
 If your question is "Is there a way to track WIP in Sage *automatically*?" then my answer is 'no, there isn't'. 
 Some of what you would need could be done with the built-in reports such as the Time & Billing Detail reports in the Report Centre. 
 The automatic entries are based around getting the tax remittances and employee pay correct, so the pay cheque / direct deposit date is used for accounting, rather than the actual dates the work was performed. 
 In a nutshell, it'll mostly have to be manual accrual entries, if you want the numbers on the financial statements. 
 If you just need the numbers for management reports, then it's a matter of building complex reports that will summarize the data the way you want it.

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Work in Progress - tracking in SAGE

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