Real Revenue Adjustments and Profit First Accounts

A question that comes up for some readers is how to set up Profit First Accounts when you have a real revenue adjustment. 

Not all companies require this, but if you do:

  • Money goes into your income account
  • Allocate money that is not recognized as real revenue that goes to materials and subs, and create/put it in a materials and subs account
  • The residual money in your income account is now your real revenue
  • Then you can complete the Profit First allocations based upon that

That’s the extra step that’s needed. Now go set up those accounts!

Comments

1 thought on “Real Revenue Adjustments and Profit First Accounts”

  1. Thanks Mike for clarifying.

    One question: If I want to spend some money on advertising/ marketing, do I directly debit the sales account and allocate in the account for Advertising or should I let the sales money flow through the real revenue account, allocate profits, let it settle in the Opex account and then spend for advertising from my Opex account (without opening a separate advertising account)?

    Thanks!!!

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