Unearned and Accrued Revenue Flashcards
Define unearned revenue and classify it
Unearned revenue is when the business receives cash in advance for revenue that is yet to be earned, and is a current liability
What is the general journal entry for a reception of cash that is unearned revenue
Debit: Bank
Credit: Unearned revenue, GST clearing
What is the general journal entry for the revenue that becomes earned after adjustment day
Debit: Unearned revenue
Credit: The revenue
Define unearned sales revenue
A type of unearned revenue that includes a deposit being received in advance for the provision of inventory in a different period
What is the general journal entry for a reception of cash that is a deposit
Debit: Bank
Credit: Unearned sales revenue
What are 2 differences between an unearned cash sale and an unearned credit sale
- The bank is the effected for cash whereas its accounts receivable for credit. 2. There is an invoice to verify a credit deposit and a receipt is used to verify a cash deposit
What is the general journal entry for the sales revenue that becomes earned after adjustment day
Debit: Unearned sales revenue, Bank or A/C Rec, Cost of sales
Credit: Sales/GST clearing, Inventory
How is unearned sales revenue recorded in the 3 financial reports
CFS: Operating inflow
IS: N/A
BS: Current liability
Define accrued revenue and classify it
Revenue that has been earned but cash is yet to be received for, and is a current asset
What is the general journal entry for revenue that has been earned but cash is yet to be received
Debit: Accrued revenue
Credit: The revenue
What is the general journal entry for the accrued revenue that becomes earned in a subsequent period
Debit: Bank
Credit: Accrued revenue (relates to revenue earned last priore), The revenue (earned and received this period)
How is accrued revenue recorded in the 3 financial reports
CFS: N/A (No cash received or paid)
IS: N/A (The revenue itself is)
BS: Current Asset
