1How do you close income accounts
Debit XXX Income and Credit Income Summary
2What is income in the form of revenue
Amount earned from the main business activities
3What is income in the form of other income
Amount earned from other business activities
4Why do we need to record/make adjustments to the income account?
Revenue recognition theory and Accrual basis of accounting
5What is the revenue recognition theory
Revenue is earned when goods have been delivered or services have been provided
6What is the Accrual basis of accounting
Revenue or income is recognised in the period when earned, regardless of whether payment has been received or not
7What are income receivables?
Refer to the amount businesses have not yet received but the services has been provided at the end of the financial period
8What is income received in advance?
Refers to the amount business have received but the services has not been provided at the end of the financial period
9What are income receivables recorded as in the statement of financial position
Current assets as XXX income receivables
10What is income received in advance recorded as in the statement of financial position
Current liabilities as XXX income received in advance