In this topic, we will the Accrued expenses and accured income because both they are opposite to each other and easy to understand
Every person who belongs to the accounting filed listen a word accrued expenses and if someoneask about this you feel really same why I don't know about this question for here is the answer of your question what is accrued expense.
Accrued expenditure is the expenditure that has been incurred but not yet paid.
The expenditure should be recorded in the accounting period in which it is spent.Therefore, the accrued expenditure should be identified in the accounting period in which it is compared to the following period in which this payment will be made.
Since the expense will be debited to record the derivative expenditure, the credit payout should be made in the account for the same amount.
Journal Entry For Accrued expense
you are ABC company and you have received a telephone expense bill of $100 on 25 on Dec but it will be payable on 3rd of Jan and so you have to close your account and you have to count that expenses in Dec so that time you have to create a journal entry for the accrued expense
At the time of expense is occurred
Expense account Debit $100
Accrued expense Credit $100
Meaning of this entry: This entry means we booked the expense in that period
At the payment of Expense
Accrued expense Debit $100
Bank Credit $100
Meaning of this entry: At the time of payment of expense we will create this entry
So if understand the concept of accrued expense then you can easily understand the accrued income because accrued income is just opposite of accrued expense
Accrued income is the income which is earned but did not receive
we have to do the accounting entry for accrued income because in accounting period we have earned an income but we did not receive.
Jurnal Entry for Accrued income
Journal Entry For Accrued expense
you are ABC company and you have received a telephone expense bill of $100 on 2 5 on Dec but it will be payable on 3rd of Jan and so you have to close your account and you have to count that expenses in Dec so that time you have to create a journal entry for the accrued expense
At the time of expense is occurred
Expense account Debit $100
Accrued expense Credit $100
Meaning of this entry: This entry means we booked the expense in that period
At the payment of Expense
Accrued expense Debit $100
Bank Credit $100
Meaning of this entry: At the time of payment of expense we will create this entry
So if understand the concept of accrued expense then you can easily understand the accrued income because accrued income is just opposite of accrued expense
Accrued income is the income which is earned but did not receive
we have to do the accounting entry for accrued income because in accounting period we have earned an income but we did not receive.
Jurnal Entry for Accrued income
you are ABC company and you have earned a interest of $100 on 25 on Dec but it will be Receivable on 3rd of Jan and so you have to close your account and you have to count that expenses in Dec so that time you have to create a journal entry for the accrued expense
At the time of income is occurred
Accrued income Debit $100
Interest Credit $100
At the time receipt of Income
Bank Debit $100
Accrued Income Credit $100
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