What is accrued income? Income that the business has earned but not yet received. Simply put, we have given services but have not received the amount yet. We call it earned income. These are kind of current assets because we have earned money. And these are shown in the asset site of our Balance sheet. Let us show this against income in Profit and Loss Account. And this earned Income is also shown to us on the assets site of the balance sheet. Because these are assets that are yet to be taken.
Accrued Income is an Asset or a Liability
Earned income is not always an asset to an individual, depending on whether you have worked somewhere or you have someone else to work for, you have found someone to work in your company, then earned income is your There is no property. . Because you have to pay for it. Hence earned income is your current liability which you have to pay. And income accrued for the work done by the person in front means the asset, which he has earned but not yet received.
Accrued Income Debit or Credit
When a company has earned income, its effect is in 2 places. One increase in income and the other increase in your wealth. And when the asset increases then the Asset is debited and when the income increases then the income is always credited. Let me tell you by giving an example of commission that suppose you have a company which takes commission but works to get projects to other people. And gave a big project to one of your company and your commission in it is Rs. 10000. So this is the income earned for your company. And earned income always comes in debit site because these are assets for a company. And as commission is received by your company, then it is your income which will be credited, now while entering it in tally, we will create a ledger of the commission earned and debit Rs 10000 in it. And commission is income for our company, so we will credit it by creating a commission Ledger. Due to which the assets of the company will also increase and the income will also increase by Rs.
Accrued Income entry in tally
|Accrued commission ( Current Assets )||10000|
|commission ( Income )||10000|
Accrued Income Example
- Commission – If your company gets any work done by taking commission, then commission is the income for you, there are many types of transactions in business, if your commission is left in any person then it is the income earned for you. Because you have earned it but you haven’t received it yet.
- Interest – If your job is to pay interest on interest then interest is direct income for you, if someone doesn’t pay interest on time, then even if you didn’t get it but it is earned income for you, and do it in entry tally Time you have to show it in assets and income.
- Salary – If you work as an employee in a company, then your salary is 10000, then if you have not received salary for 6 months, then this is your production income, the company should also see this salary in its book. drops down. This is your earned income till you get your 60,000 rupees for 6 months. Because your services have been given but you have not yet received the payment for it.
How to Maintain Accrued income in accounting?
When ACCRUED INCOME is entered, the accountants of the two companies between which the transaction takes place have to record it in their books, the above was explained by giving an example of commission, there were two companies in which one company had to Have to take commission. Which was ACCRUED INCOME for him, and the Accountant of the company will show the Accrued income in his assets and income. On the other hand, for the company which has to pay commission, that commission is an expense. And it’s a kind of current Liability for that company, so when the accountant enters the company, the liability has to show commission.
When the company pays commission to the second company, then the ACCRUED INCOME will be equal to the assets of the first company. And the liability of the other company will be equal.