When exactly do we recognize costs.
Question: Say we have a weekly report to present to management including costs incurred for this week. We have employee timesheets so I assume we use these to report the weeks labor costs. But what if we ordered computer hardware that we know the approximate cost is $40,000. But we can't say this is an exact actual as we have not been billed yet as it could end up being say 42,000.
So the quetion is do we put the $40,000 in our weekly report and go back and change it later when the accounting departmnt reports the actual invoiced amount or do we even wait til later when the invoice has been paid.
What is the correct thing to do? I expect that there will be other times when we may want to change originally acuals only after they have been through the company's accounting process.
Thanks to anyone who can clarify this for me.