Accounting of Service Income

TITAN COMPANY LIMITED

Standard Operating Procedure (SOP)

For
Accounting of Service Income
 Accounting of Service Income
PURPOSE:

Revenue recognition of our company owned watch service center.

Step Responsibility Owner Approving Authority

Initial responsibility is to collate service
income report from various service centers
by mail and as well as hard copies.
The same needs to be thoroughly checked
with banking report, if any discrepancy the
same has to be explained and clarified by the
Service Center Manager.

Accounting Steps:
1. After tallying the sales day book
report spooled from CISF Microsoft Dynamics
package with banking report, Commercial Regional Regional
team need to check whether all the Service center Commercial Commercial
has done their EOD .

2. After that need to check that all data has flown

From AX Upload to SAP FIT A/c

3. The Banking Report is being checked

with the Physical PIF to ensure there
has been no delay on Banking.

5.Invoice is being Knocked off against payment

Received.
 Accounting of Service Income
Process:-

Step1: Checking of the day end reports to ensure that the banking is done which is cross checked
with the PIF slip which indicates the cash collected by the CMS agents.

Step 2: (Non Key): A monthly reconciliation is done at the end of the month in order to track the
time gap between the receipt of funds and the banking.
Based on the Bank MIS received, Corporate Finance Treasury will pass the credit entry to FIT GLs.
This is taken as a base for FIT Clearing.

Final accounting entry:

Accounting of Service Income

1. Debtors Transition A/C Dr
Trade Discount A/c Dr.
Sales Tax Exp A/c Dr
Empowerment CSF A/c Dr..
Service Tax Payable A/c Dr
To CST Payable A/c
To Vat Payable A/c..
To Service IncomeA/c
To Service Labour A/c.

2. CCDD A/c Dr..

To Debtors Transition A/c.

3. FIT A/c Dr.

To CCDD A/c.
RISK & MITIGATION:

RISK
Operational Risk:
Delay in credit from corporate, thus clearing is delayed at Regional Commercial. Thus if corporate
credit is given on a daily basis, then clearing and follow up pending receipts is easier.

Financial Risks:
Service Center delayed banking will not be reflected as we are in the assumption that corporate
credit is yet to be received.

Accounting Risks:
At present , all the service centre credits are being passed to our WATCH FIT A/c where from we
need to track manually which are the transactions pertaining to service centre .as the RTGS is being
transferred. As this is manually done, there are chances of missing certain customer credits.

Thus, Virtual set of accounts needs to be done, along with automatic circulation of statement
of account by the respective banks at the end.