An advance is a payment made before goods are delivered or services are provided.

Simple Meaning:

It is money paid or received before the actual transaction is completed.

Types:

Advance paid → Asset (shown in Balance Sheet)

Advance received → Liability (shown in Balance Sheet)

Example:

If a customer pays ₹50,000 before delivery of goods, it is an advance received by the seller.

Purpose:

To confirm an order

To ensure commitment from both parties

To provide working capital

In short, an advance is an early payment made before the final completion of a transaction.