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

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

1. What is accrued income?
Accrued income refers to the revenue that has been earned but not yet received. It is recorded as an asset on the balance sheet and recognized as income in the income statement. This type of income is typically generated from services rendered or sales made on credit.
2. How is accrued income recorded in the accounting books?
Accrued income is recorded by debiting the accrued income account and crediting the corresponding revenue account. This entry recognizes the revenue and increases the company's assets, reflecting the amount receivable from the customer.
3. What is deferred income?
Deferred income, also known as unearned income or deferred revenue, refers to the cash received in advance for goods or services that are yet to be delivered. It is recorded as a liability on the balance sheet and recognized as income in the income statement when the goods or services are provided.
4. How is deferred income recorded in the accounting books?
Deferred income is recorded by crediting the deferred income account and debiting the corresponding liability account. This entry reflects the obligation to provide goods or services in the future and decreases the company's liabilities.
5. What is the difference between accrued income and deferred income?
The main difference between accrued income and deferred income lies in the timing of recognition. Accrued income represents revenue that has been earned but not yet received, while deferred income represents cash received in advance for goods or services yet to be provided. Accrued income is recognized as an asset, while deferred income is recognized as a liability.
82 videos|105 docs|42 tests

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