Income must be reflected in the period in which it is actually received

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First, the allocation of future income is a requirement for accounting. The accrual principle on which accounting is based states:

This means that the company is obliged to separate funds received in advance and actual income received for the current period (year, month).

Secondly, in this way you reduce the taxable base of the current period. If you romania phone number list enter all the income in the report as for the current period, the amount will be 2 times more. The company will have to pay more taxes, which can affect profit and financial stability. It will be more profitable for the business to distribute the income evenly. And thus legally reduce the taxable base in this period.

Thirdly, DBP helps the company to better plan production and cash flows. When funds are distributed over periods, it is easier for management to keep records, analyze documents and estimate how much real income will be received in the current period. This will help to obtain an objective financial result .

After all, if you take into account and accrue income from future periods in this one, this will affect the final indicators and unreasonably inflate them.


Separating future revenues from current revenues increases the overall transparency of accounting (including taxes). Partners, investors, and creditors see what is really happening within the organization from a financial perspective, rather than one-off spikes and accruals of income from prepayments.

If you want to get more useful information about the cost of different assets, building a business, calculating expenses, you can check out our new Telegram channel "Compass Magazine" . Subscribe and don't miss interesting content!
What is related to DBP
Not all receipts can be attributed to future income. There are differences between, for example, estimated income and DBP. Let's compare two similar situations.