Query relating to journal entries
This query is : Resolved
25 December 2013
could any one say entries and explanation for
prepaid expenses
outstanding expenses
income received in advance
accrued income....
Thanks in advance......
02 January 2014
1. Prepaid expenses
Prepaid expenses A/c Dr
To Bank A/c
Since the payment has been made but expense is not incurred it is an asset.
Next year
Expenses A/c Dr
To Prepaid Expenses
2. Outstanding expenses
Expense A/c Dr
To Expense Outstanding
Since expense has been incurred but payment has not been made, it is a liability.
Next year
Expense Outstanding A/c Dr
To Bank
3. Advance income
Bank A/c Dr
To Advance Income
Since amount has been received, but sale has not been made/ service has not been provided, it is our LIABILITY to supply the goods/provide the service.
Next year
Advance income A/c Dr
To Income
Prepaid expenses A/c Dr
To Bank A/c
Since the payment has been made but expense is not incurred it is an asset.
Next year
Expenses A/c Dr
To Prepaid Expenses
2. Outstanding expenses
Expense A/c Dr
To Expense Outstanding
Since expense has been incurred but payment has not been made, it is a liability.
Next year
Expense Outstanding A/c Dr
To Bank
3. Advance income
Bank A/c Dr
To Advance Income
Since amount has been received, but sale has not been made/ service has not been provided, it is our LIABILITY to supply the goods/provide the service.
Next year
Advance income A/c Dr
To Income
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