How to Record Cost Recoveries
by Owner, Bookkeeper
What does GAAP say?
I have a consulting client who prepays for training workshops for his clients. He is charged by the training institute then he turns around and charges his clients (as a recovery) for the cost of the training.
He does not charge an administration fee for doing so. It turns out to be a wash; total billing for training (expense) is recovered by invoicing his clients back. He does not take the training himself.
Do I post this as a payable to the training institute then put the revenue he receives from his clients as a cost recovery, against the expense to net zero? Rather than having the revenue viewed as revenue?
Hey,
I'm not sure where you are located but as far as I know, generally accepted accounting principles state that cost recoveries should not be netted against expense but recorded as revenue.
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