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December 17, 2008

What is the accounting entry when an order is received?

There is no accounting entry into the general ledger accounts when an order is received. The reason is there is no sale or sales revenues and no accounts receivable until the goods are shipped or delivered—depending on the sales terms.

A record will likely be created in the company’s system to track the order, plan for materials, shipping, etc., but there will not be an entry into the company’s general ledger until the order is at the shipping stage.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.



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Comments

2 Responses to “What is the accounting entry when an order is received?”

  1. MUHAMAMDHASAN on January 14th, 2009 8:05 am

    What are reserves why these are placed on liability side of a balance sheet,either these remains unused for the financial period.

  2. MUHAMAMDHASAN on January 14th, 2009 8:07 am

    sorry my earliear response is irrelevanr.

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