Accounting Journal Entries For Expenses And Revenues / Income

We know that Expenses are the costs incurred to earn Revenue for the business while Revenue is the price of goods sold or services rendered by the business to its customers. Income is the Difference Between Revenues And Expenses.

For More Detail, You Can Read Out This Helpful Article, “What is The Difference Between Net Income And Revenue”

Note: For Accounting Journal Entries, We assume here only Revenue as there is no difference between Income and Revenue when we pass journal entries for both of them because both have same rules of Debit And Credit.

The Normal Balance for Expense is Debit while Unfavourable or Negative Balance is Credit while Revenues having Credit Balance as a Normal Balance or Favourable Balance but Debit Balance is Negative or Unfavourable Balance for Revenues.

The General Rule of Debit And Credit for Expenses is that when expenses increase, we Debit these one and when these decrease we Credit these one. But For Revenues / Income, the situation is totally reversed. When Revenues increase, we credit it and when these one decrease, we debit these one in the Book or Journal of Business.

For Proper Understanding About Debit And Credit You Can Read Out, “What is the Difference Between Debit And Credit”

After understanding above General Rule for Debit And Credit, You Can pass the Journal Entries For Expenses or Revenues in the Book or Journal of Business.

Example For Expenses:-

Suppose, the company paid advertisements expense Rs. 10000 for the purpose of earning Revenues, then following Accounting Journal Entry is passed:

                                       Advertisement Expense a/c 10000

                                                                               Cash a/c 10000

(Paid Advertisement Expense Rs. 10000)

Here, Advertisement Expense is decreasing by Rs. 10000, we Debit it while Cash is paid and it is going from the business, so we Credit it by Rs. 10000.

Example For Revenues:-

Mr. A Sold Goods Worth Rs. 70000 For Cash:

                                                              Cash a/c  70000

                                                                          Sales a/c   70000

(Sold Goods Worth Rs. 70000 For Cash)

In the above illustration, the Cash is increasing as it is coming into the business by Rs. 70000, so we Debit it. Sales as a Revenue is also increasing as goods are selling to customers, so sales is increasing by Rs. 700000.

So, in this way, you can easily pass Accounting Journal Entries For Both Expenses And Revenues in The Book or Journal of Any Business.