taken from the
This is income or a part of income, which is receivable during
a financial period, but is not yet received as at the end of a financial year.
The income account must be adjusted to reflect the income that should have been
received for 12 consecutive months or accounting periods or reporting dates. The
amount by which the income account is outstanding will increase the amount of
the income at the end of the financial year. At the end of the financial year a
current asset is created - Accrued income, because the amount of the income is
owed to the business.
To Identify, Enter the Transaction and to Post the Transaction to the Ledger:
Identify the account and calculate the income,
which is not yet received and recorded during this financial year. For example,
after analysing the pre-adjustment trial balance, it is discovered that the
interest income is reflected as R(£) 2 500. This interest represents the
interest that has been received on a fixed deposit for the months of March to
December. The bank will credit the interest for the two months, January and
February during March. The interest on the fixed deposit is calculated at 10%
per annum and an amount of R(£) 3 000 interest should have been received for the
year.
Interest was already received to the amount of R(£) 2 500. The income account reflects interest received for 10 months as at the end of the financial year. But as 2 months interest will be received in the new financial year in respect of the current financial year, it is a current asset.
The interest receivable for 2 months must be recorded to reflect the correct income for the financial year. To have the correct income reflected in the financial statements, the interest not yet received for the current period must be recorded in the income account and transferred to the accrued income account.
Enter the transaction in the General Journal.
Press the 
key on your keyboard or click on the 
speed button or icon. The Batch Type
selection screen will be displayed.
Select the General journal Batch Type and click
on the 
button. The General journal Batch Entry screen will be displayed. If
the correct contra account for the batch was not displayed on the Batch Type
selection screen, press the 
key on your keyboard or click on the
speed button or icon to set the options
for this batch. Note that it is recommended that the Amount Entry field be set
to allow both (debit and credit).
Enter the transaction in the batch. After
entering the transactions in the general journal, the transactions is as
follows:
Click on the 
speed button or icon or press the
key on your keyboard. Select the change the alias option.
Click on the
speed button or icon or press the
key on your keyboard to post the transactions to the ledger. After
posting the transactions to the ledger, the entries should reflect as follows in
the ledger.
The income accounts will result that the net profit be increased with the income of R(£) 500, which is not yet received as at the end of the financial year (28/29 February). It has also increased the current assets, as it is an income, which will be received for the new financial year.
An income of R(£) 3 000 will be recognised as income and not R(£) 2 500. It has affected the profit in the previous financial year, but will have no effect on the profit in the new financial year.
To Identify, Enter the Transaction and to Post the Transaction to the Ledger:
Identify the account and calculate the income,
which is not yet received and recorded during this financial year. For example,
after analysing the pre-adjustment trial balance, it is discovered that the
interest income is reflected as R(£) 2 500. This interest represents the
interest that has been received on a fixed deposit for the months of March to
December. The bank will credit the interest for the two months, January and
February during March. The interest on the fixed deposit is calculated at 10%
per annum and an amount of R(£) 3 000 interest should have been received for the
year. Interest was already received to the amount of R(£) 2 500. The income account reflects interest received for 10 months as at the end of the financial year. But as 2 months interest will be received in the new financial year in respect of the current financial year, it is a current asset.
The interest receivable for 2 months must be recorded to reflect the correct income for the financial year. To have the correct income reflected in the financial statements, the interest not yet received for the current period must be recorded in the income account and transferred to the accrued income account.
Enter the transaction in the General Journal.
Press the key on your keyboard or click on the speed button or icon. The Batch Type
selection screen will be displayed. Select the General journal Batch Type and click
on the button. The General journal Batch Entry screen will be displayed. If
the correct contra account for the batch was not displayed on the Batch Type
selection screen, press the key on your keyboard or click on the
speed button or icon to set the options
for this batch. Note that it is recommended that the Amount Entry field be set
to allow both (debit and credit).Enter the transaction in the batch. After
entering the transactions in the general journal, the transactions is as
follows:
Click on the speed button or icon or press the
key on your keyboard. Select the change the alias option.Click on the speed button or icon or press the
key on your keyboard to post the transactions to the ledger. After
posting the transactions to the ledger, the entries should reflect as follows in
the ledger.The income accounts will result that the net profit be increased with the income of R(£) 500, which is not yet received as at the end of the financial year (28/29 February). It has also increased the current assets, as it is an income, which will be received for the new financial year.
An income of R(£) 3 000 will be recognised as income and not R(£) 2 500. It has affected the profit in the previous financial year, but will have no effect on the profit in the new financial year.
