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Prepaid Income

Prepaid income also known as unearned income, which is received in advance before supply of goods or services.

 

Prepaid income or advance received is treated as a liability in the supplier books of accounts.

 

Examples of income received in advance is rent received in advance, commission received in advance etc.

 

 

Accounting Entry for Income Received in Advance

 

Bank A/c Dr 30,000

 

To Prepaid Rent Income A/c 30,000

 

 

When income is recognised as income in the next accounting period, then we have to post below accounting entry.

 

 

Prepaid Rent Received A/c Dr 30,000

 

To Rent Received A/c 30,000

 

 

Other Example

 

Bank A/c Dr 20,000

 

To Prepaid Commission Received A/c 20,000

 

 

Prepaid Commission Received A/c Dr 20,000

 

To Commission Received A/c 20,000

 

 

 

 

Related Topics

 

Prepaid Expenses

 

What is Petty Cash?

 

Bank Reconciliation

 

 

Related Pages

  • Fixed Asset Entries
  • Payroll Journal Entries
  • Accrued Expenses
  • Accounting Basics
  • Debits and Credits
  • Chart of Accounts
  • Bookkeeping
  • Petty Cash
  • Bank Reconciliation
  • Accounts Payable Process
  • Accounts Receivable Process
  • Prepaid Expenses
  • Discount Allowed and Discount Received
  • Journal Entries
  • Adjusting Entries
  • Depreciation
  • Current Liabilities and Current Assets
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