Advances from customers

Advance from a customer is a liability account, in which all payments from customers are stored for goods or services that have not yet been delivered. Once the related goods or services have been delivered, the amount in this account is shifted to a revenue account.

-The advance from the customer account is typically considered a short-term liability account since the amounts stored in it are usually settled within 12 months. If advances are not expected to be settled within this period, they are instead classified as long-term liabilities.

-Audit of advances forms a major portion of the work of the auditor. The auditor needs to be more perspective and skeptical while auditing advances