Journal Entry for Income Received - Recording of Transactions I Video Lecture - Class 11

let's see how do you account for incomes
you've already seen how you account for
sales let's take a couple of income
let's say you have interest proceed from
bank or let's say from X then you have
Commission received in cash and then
there could be a host of other incomes
that could be there so the first thing
is you received interest from the bank
now when bank gives you a credit for
interest your bank balance of this leap
goes up so the two accounts involved
here are interest Bank or interest and X
so when you get the interest from the
bank your balance in the bank goes up
bank is an asset increasing an asset is
to be what in debit it
so you debit the bank by 100 to the
other account is interest undresses what
income so when you get interest your
income is increased
whenever the income is increased it has
to be credited right now instead of bank
if X would have paid you interest then I
mean if he has paid you then obviously
you would have received cash or cheque
so instead of Bank you will have cash
but if it is not paid but let's say X
accrues interest then what does this
mean I have a receivable from X X is my
debtor X is an asset so the balance from
x increases therefore i debit X by 50
and I credit interest for the same
reasons as I discussed with you here my
50 seconds commission received in cash
which are the accounts involved
commission account cash account when you
receive Commission in cash you receive
cash cash is an asset increasing an
asset is to be debited to why did you
receive this cash you received it on
counter of commission so the Commission
account is the other account which is
involved here Commission is what an
income account here and when an income
account is there increase in the income
account is credited so you credit the
Commission account where 200 okay so
that's the way you make entries for
incomes