Day 4 of 15 (15 Days challenge - Accounting Entries) Year-end adjustment entries/Journal R94: Treatment of Accrued Income in the books of accounts. Accrued income refers to revenue that has been earned but has not yet been received. Both individuals and companies can experience accrued income. Although it is not yet in hand, accrued income is recorded on the books when it is earned, following the accrual accounting method. Here are some key points about accrued income: Definition: Accrued income represents money a company or individual has earned during the accounting year but has not yet received within the same accounting period. Accrual Accounting: Most companies use accrual accounting, which is an alternative to cash accounting. It is necessary for businesses that sell products or provide services on credit. Under U.S. generally accepted accounting principles (GAAP), accrual accounting aligns with the revenue recognition principle. This principle ensures that revenue is matched to the period in which it was earned, rather than when cash is received. Matching Principle: The matching principle also requires that revenue be recognized in the same period as the expenses incurred in earning that revenue. Examples: Accrued income is often used in the service industry or when customers are charged an hourly rate for work that has been completed but will be billed in a future accounting period. Balance Sheet: Accrued income is listed in the asset section of the balance sheet because it represents a future benefit to the company in the form of a future cash payout. #finance #financetips #account #accounting #accountability #accountant #business #businesswoman #businessowner #businessman #businesstips #income #passiveincome #incometax #gst #reels #reelsinstagram #reelsindia #viral #viralvideos #viralreels #instagram For more details and full videos subscribe to our TH-cam channel: www.youtube.com/@cadeveshthakur Website: cadeveshthakur.com/ #viral #shortvideo #viralvideo #shortsvideo #shorts #youtubeshortsvideo #shortsyoutube #viralreels #viralshorts #viralshort #trending #cadeveshthakur
Day 4 of 15 (15 Days challenge - Accounting Entries)
Year-end adjustment entries/Journal
R94: Treatment of Accrued Income in the books of accounts.
Accrued income refers to revenue that has been earned but has not yet been received. Both individuals and companies can experience accrued income. Although it is not yet in hand, accrued income is recorded on the books when it is earned, following the accrual accounting method.
Here are some key points about accrued income:
Definition: Accrued income represents money a company or individual has earned during the accounting year but has not yet received within the same accounting period.
Accrual Accounting: Most companies use accrual accounting, which is an alternative to cash accounting. It is necessary for businesses that sell products or provide services on credit. Under U.S. generally accepted accounting principles (GAAP), accrual accounting aligns with the revenue recognition principle. This principle ensures that revenue is matched to the period in which it was earned, rather than when cash is received.
Matching Principle: The matching principle also requires that revenue be recognized in the same period as the expenses incurred in earning that revenue.
Examples: Accrued income is often used in the service industry or when customers are charged an hourly rate for work that has been completed but will be billed in a future accounting period.
Balance Sheet: Accrued income is listed in the asset section of the balance sheet because it represents a future benefit to the company in the form of a future cash payout.
#finance #financetips #account #accounting #accountability #accountant #business #businesswoman #businessowner #businessman #businesstips #income #passiveincome #incometax #gst #reels #reelsinstagram #reelsindia #viral #viralvideos #viralreels #instagram
For more details and full videos subscribe to our TH-cam channel: www.youtube.com/@cadeveshthakur
Website: cadeveshthakur.com/
#viral #shortvideo #viralvideo #shortsvideo #shorts #youtubeshortsvideo #shortsyoutube #viralreels #viralshorts #viralshort #trending #cadeveshthakur