Accrued Revenue Adjusting Entries Examples Help

Accrued Revenue Adjusting Entries Examples, Samples, Illustrations, Calculation Help Online


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What is Accrued Revenue Adjusting Entries?


Accrued revenue is that revenue which a concern has earned but has not yet received from the paying customer. According to the accrual concept of accounting, revenue received or yet to be received has to be shown in the final accounts otherwise profit and assets will be understated.

When accrued revenue is recorded it is treated as revenue for the accounting period in which it has been earned though cash has not been collected from the customer. Therefore, adjusting entries are passed.
Adjusting entry is passed in the books of accounts to show effect of transaction that should have been recorded in the books of accounts but are not recorded. Journal entries passed to effect the required adjustments are known as adjusting entries.

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Accrued Revenue Adjusting Entries Explanation


Let us understand the concept of adjusting entries with help of an example.
Example: On 1st Jan 2015, a company invested $300000 in securities that return 5% interest per year. The adjusting entry to be shown on Jan 31st will be as follows

$300000 x 5% / 12months = $1250
Jan. 31 Interest Receivable (debited) 1250
Interest Revenue (credited) 1250

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