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Accounting Issues

Unliquidated progress payments are frequently shown on the balance sheet as a liability rather than as a negative receivable.

According to AICPA accounting literature, progress payments are not usually recognized on the balance sheet as receivables, and are not shown at all until the customer has paid them. This literature assumes that project costs are shown on the balance sheet as inventory (Work-In-Process), and it states that it would be incorrect to show progress payments as an offset to inventories. Examples of accounting transactions under each of the setup options are available in the "Initialization" topic.

In Costpoint, you have the option of showing project costs as inventory (WIP projects) or as income statement items (regular projects). If your company primarily uses WIP projects, consider NOT selecting the Progress Bills to GL When Billed check box on the Configure Billing Settings screen. When you select this check box, all files except those in the general ledger are updated when progress payment bills are posted. In support of this, an option exists on the Accounts Receivable Aging Report that allows you to suppress progress payment invoices so that your receivables report tie to your balance sheet.

Whether you are posting progress payments to the G/L when billed or not, you may want to present "Unliquidated Progress Payments" as a liability on the balance sheet, rather than mixed in with unbilled receivables.