What is advance income❓

What is advance income❓

Many friends may be puzzled by the various improvements. with many things The advance earnings adjustments are also one of them. This article will make friends Definitely understand about the income received in advance.

Unearned Revenues is the receipt of advance payments from customers. where customers will not receive services or products immediately, such as rental income received in advance Advance commission income, etc., which this amount will become Current liabilities of the business and will be recorded as income. only when the customer has received the service or the product has been delivered And recording adjustments at the end of the period can be done in 2 ways: record as income in advance or recorded as income

🔹 Recording in advance earnings

This is to record the total amount acquired as a liability. At the end of the period, the income received in advance is adjusted to the income in the income statement in the part that has already been rendered to customers.

on the day the money is received

debit cash xxx

Credit Advance income xxx (It is a list of liabilities on the balance sheet)

At the end of the period, the customer may have already received some services or products. will be accounted for clearing the revenue in advance of the service that has been rendered out of the account which will record the revenue recognition instead of the same amount

on the date of the update

debit cash xxx

Credit Advance income xxx (It is an income item in the income statement)

🔹 Recording as income

This is to record the total amount gained as income in all income statements. If at the end of the period there is too much income Therefore, the income must be adjusted to show as income for the accounting period only. The remainder will be recorded as a pre-receipt list.

on the date of the update

debit cash xxx

Credit advance earnings xxx (as income in the income statement)

At the end of the period, the customer may have received some but not all of the services or products. If all records are still recorded as revenue will make the income in that period too high Therefore, the amount recognized for revenue must be adjusted to show the actual revenue for the period. and take the unserviced portion as a pre-receipt list.

on the date of the update

debit cash xxx

Credit advance income xxx (as a liability on the balance sheet)

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