It seems to go against the grain of strict accounting rules, but it is true nonetheless: How you organize your financial statements is entirely up to you. It’s a freedom that can help you better understand your business — so long as you tread carefully.
Nowhere is this freedom more important, and more often abused, than in the “Income” section of your P&L. What you consider income and when you recognize it (called revenue recognition) are key to a good understanding of your business. Do it wrong and you’ll not only fool yourself about your income, but you could get cross-ways with the IRS. Do it right and it will open your eyes to opportunities for new customers and new profits.