Adjustment: Accrued Income and Deferred income Video Lecture | Accountancy Class 11 - Commerce

next adjustments a crude income a crude
income what is an accrued income income
which is being earned but not received
what is a crude income income earned
earned but not received but not received
income earned but not receive if we take
an example let us take interest income
it is possible that the bank pays us
interest only on a specific date maybe
the bank gives us interest only on 30th
June and let us say interest for the
year in debt up to 38 June amounts to
again for ease of calculation I am
taking an amount of thousand two hundred
so thousand two hundred is our interest
income from first July to 31st to 30th
June this is our impressed income but
this will be paid to us payable by the
bank only on 36 so what is the total
interest income thousand two hundred for
the period July to June when we close
our books on 31 3 we find low income has
been received however we have earned
income earned income from July August
September October November December
January February and March for nine
months so on 31 three 900 rupees must
III take a last income must be credited
as in but money has not come in
therefore it is a receivable the account
involved is called a
so we have a receivable called accrued
income debate to income account to
interest income account to interest what
is the amount in word 900 for the
current year 900 for the current clear
so what is this accrued income account
where income has been owned but not
received again this is a representative
personal account in this example of us
it represents the account of the bank
from whom interest is to be received
accounting entry like we said at the end
of the year bring it into the books
since it is income therefore increase
income credit income and debit the
receiver birth account asset account
accrued income account debit to interest
if accrued income already appears in the
balance sheet it is nothing but an asset
and is taken to the asset side of the
balance sheet accrued income sham has an
investment in 10% debentures of XYZ
limited amounting to one like 20,000 so
10% debentures would mean 10% off one
like 20,000 10% of the face value of the
value of the investment that is 12,000
the date of payment of interest on the
debentures is 31st December Shawn closes
his books on 31st March what would be
the adjusting entry in the books of
Shawn for the outstanding interest
income as at 31st March so what has
happened is the debenture interest
income would have been received up to
31st December because the company pays
interest on 31st December 31st December
January February and March the interest
for these 3 months we will not receive
you will not receive till it is 31st
December so what is the interest for
these three
let us see it is 10% of 1 lakh 20,000
for 3 months how much is this this would
be 3000 this 3000 income is a crude but
not yet received so what is the
accounting entry income has to increase
on one side therefore will credit income
interest income and what shall we do it
we will debit the company's account
actually we debit the accrued interest
account the account is called
accrued interest account represents the
company was he shoot the debentures it
is a representative personal account so
what will be the entry the entry will be
abroad in the rest account the bed 3000
- interest so income increased accrued
income receivable increase this would be
the adjusting entry in the books of sham
for outstanding interest income as on
31st March