on 5th march 2019, Mehta brothers received 100% advance for goods to be supplied next month. the cost of the goods was rs50000. they usually sell goods at 10% markup. Name the type of expense / income? Treatment of income? expenses in the profit loss sccount? impact of the income? expenses in the balance sheet
Answers
Answer:
आशीष मिलेगा आशीष Chanchalani dekho
Answer:
• Identification of Income: It is an Accrued Income.
• Definition: Accrued income is a revenue that has been earned but has yet to be received.
Examples: Dividend declared by company but not received yet (Financial year), Interest earned by company but not received at the end of Financial year.
• Treatment of accrued income: In profit & loss account it has been posted in credit side as an income ‘Dividend Income’
In Balance sheet it has been shown as an Assets (Current Asset)
Shows it on the credit side of the Income Statement (profit & loss account) as it is an income for the current Accounting period (just not received yet).
Shows it on the asset side of the Balance Sheet under the head “Current Assets”.
Particular Debit/Credit Impact
Accrued Income A/C Debit Debit the increase in Asset
To Income A/C Credit Credit the increase in income
Journal Entry:
Date Particular Dr/Cr Debit Credit
05TH March,2019 Dividend Receivable a/c Dr 500
To Dividend income a/c Cr 500
(Being dividend earned but not received yet)
Explanation: