Hope your boss doesn't know who you are because you are embarrassing yourself. I'm sure my 10 year old could understand this.
They receive a 50% prepayment for their goods (in advance) in 2016. That payment must be declared in 2016 as income because that is when they received the cash.
Now the goods were produced in 2017 and these goods cost money to produce. Because these costs were incurred in 2017 those costs are shown in the 2017 report. Therefor showing a lower profit than if they received the payment in 2017.
How f@&king hard is that to understand. Do you not get this very simple and true form of accounting.
Do I need to give a simpler example. If I am paid upfront for a job on the last day of the financial year, I must declare the income when I earn it, in that financial year. But I do the job the next day in the new fininacial year, I can't deduct the cost of doing the job in the last financial year I must do it in the next one. Little wonder I do my own tax, if your an accountant and don't get something that simple.
By the way I have the ego on ignore, heaps better that way because I am sure (as he has admitted it) that he actual understands the reality but chooses to piss everyone off. Never had anyone else on ignore and won't do it to the squid because it is actually quite funny.
I wish AC could get another lunch withAT, I would love to know his thoughts on what is going on out there.
GXY Price at posting:
$1.76 Sentiment: Buy Disclosure: Held
