treatment of accrued income
This query is : Resolved
10 January 2017
scenario: accrued income accounted in last financial year. invoiced in current financial year and cash receipt also in current financial year.
income recognized in last year because it rendered last year.
the entries passed are
31st last year
accrued income
to income
this year invoicing
party ac Dr
to income
Bank ac Dr
to party
Iam planning to reverse the entry made last year to correct the financial statement, by reversal income become zero and accrued income in BS aslo become zero.
is this accounting treatment is right
is there any alternative treatment with out reversal
10 January 2017
Entry in 31st (Last year) to book accrued income
Dr. Accruals - Income
Cr. Income
Entry 1st of (This year) reverse accruals
Dr. Income
Cr. Accruals - Income
At the date of invoice
Dr. Receivable (Party)
Cr. Income
At date of cash receipt
Dr. Cash/Bank
Cr. Receivable (Party)
This is the normal way.
Dr. Accruals - Income
Cr. Income
Entry 1st of (This year) reverse accruals
Dr. Income
Cr. Accruals - Income
At the date of invoice
Dr. Receivable (Party)
Cr. Income
At date of cash receipt
Dr. Cash/Bank
Cr. Receivable (Party)
This is the normal way.
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