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Retained Earnings Normally Has An Account Balance That / A Debit And Credit Balance In Retained Earnings Is Called What? Accordi ng to the Rules of Deb it A nd Credit , when Retained Earnings increases, we credit it and when it decreases, then we debit it. The N ormal B alance or usual balance for retained earnings account is Credit and it is a favourable balance or positive balance for these. It shows accumulated Profit. If there is a debit balance, then we called it a accumulated loss or deficit that is unfavourable or negative balance for retained earnings account or earnings surplus account. Retained Earnings Is Also Known As What? It is also called earnings surplus. So, we ca n say that  a credit  balance in retained earnings is called accumulated profit while a  debit balance in it is called accumulated deficit or loss.

Adjusting Journal Entry To Record An Accrued Revenue Or Accrued Expenses Results In Which Two Accounts / Adjusting Journal Entries For Accrued Revenue And Accrued Expenses In Accounting Asset Account and Income Account as the revenue earned by the business / corporation but the payment is not yet received for the accounting period. The journal entry is to debit Accrued Income or Accrued Revenue and credit the relevant revenue account. When the corporation actually received the payment by cash or check, we debit cash account and credit accrued revenue account and the net result, we have is cash account (debited) and revenue account (credited). The Journal Entry To Record An Accrued Expense Results In Which Of The Following Types Of Accounts Being Debited And Credited Expense Account and Liability Account as the expense incurred by the business / corporation is still not paid for cash during the period. So, we debit expense account and credit liability account ( Accrued Expe...

What Is Income Received In Advance / Unearned Revenue Journal Entry In Accoun ting You ca n also  study about Unearned Income in Accounting with detail that is a Deferred Income for a busi ness.  It is also called Prepaid I ncome / Reve nue i n Accou nti ng. Income / Revenue Received In Advance Is Categorized As It is a  Current Liability for the company which received income, like fees received in advance from its clients, Commission Received In Advance , etc.  but actually does not provide services to them at time of receiving the payment of services. Unearned Revenue In Balance Sheet Unearned Revenue T Account Or Ledger is prepared to record Transactions related to it. The  normal bala nce of it is credit. However, whe n we actually re nder the services, the n we debit it a nd it is recorded o n bala nce sheet as a Current Liability on liabilities & equity side during the e nd of accou nti ng period. For Exampl...

Service Revenue Definition And Meaning Whe n companies provide services to customers for a specified fees, then Service Revenue Account is created. For Services companies which provide services to customers, it is a main source of Revenue for these kinds of companies / corporations. When it is earned by the company for Cash , then the Journal Entry would be as follows:                                                           Cash a/c  XXX                                                                         Service Revenue Received a/c  XXX                      ...

Accounting Treatment Is Income Summary An Asset Income Summary is a Temporary Account and it is timely and temporarily prepared in order to close all of the temporary accounts (Revenues, Expenses, Gains and Losses) at the end of the accounting after all of the Financial Statements are prepared. So, it is not an asset account. Is Income Summary An Equity Account Income summary is not an equity account. Although it is considered as a temporary account, yet it is a temporarily part of equity account as it is closed to Retained Earnings Account which is also a part of equity account. Also, the closing balance of income summary account must be equal to the Net Profit Or Net Income or the Net Loss which is also the part of equity account, so it can be considered as a temporary part of equity account at the time when temporary accounts are closed, and also to show it as a part of Chart of Accounts but on permanent basis it is not an equity account. Is Income Summary The Same A...

When A Company Or Corporation Performed / Rendered A Service But Has Not Yet Received Payment Against Service / Corporation (Corp.) Earned Income On Account / Credit When a company / corporation performs a service but has not yet received payment, then it debits Accounts Receivable  and credits Service Revenue as it earned the revenue by rendering services to the client but still the payment has not yet received from the client. For example, a company renders services to its client for Rs. 5000 but the payment has not yet received from client during the period. What is the adjusting entry to record for the period. Provided / Performed / Rendered Service On Account Adjusting Entry / Rendered Service On Credit Adjusting Entry The adjusting entry to record is shown below:                                                           ...

Order Of Chart Of Accounts   /   The Order In Which Accounts Appear In The Chart Of Accounts Is What? The Accounts listed in the Chart of Accounts  appear in that order as these are shown in the Financial Statements i.e. in charts of accounts, the Balance Sheet Accounts (assets, liabilities and shareholders’ equity, which are Permanents Accounts) are shown firstly and then followed by the revenue and expense accounts ( Income Statement Accounts ), which are also called Temporary Accounts. So, the accounts listed in the chart of accounts are in the following order: Balance Sheet Accounts (100) Assets (200) Liabilities (300) Shareholders’ Equity Income Statement Accounts (400) Revenue (500) Expenses

Consulting Services Performed On Account Journal Entry / Performed Consulting Services For A Client On Account The Journal Entry For Consulting Services On Account / Credit to client / customer is shown below:                              Consulting Services Rendered On Account / Credit Journal Entry                                                                                    Accounts Receivable a/c  XXX                                                                                   ...

What 2 Accounts Are Affected When A Business Pays Cash For A Cell Phone Bill When a business pays cash or pays through check / cheque, then Communication Expense Account and cash or bank account is affected. Example: Mr. A is a sole proprietor pays cash of Rs. 3000 for a cell phone bill. What is the journal entry and the effect of this transaction on the accounting equation? Paid Cash For Cell Phone Bill Journal Entry The journal entry to record for paying cash for cell phone bill is shown below:                                                            Communication Expense a/c  3000                                                                     ...

Cost of Goods Sold or Cost of Sales is a Temporary Accou nt as it is closed to Income Summary Account  f or t he period a nd it is not a Permanent Account . Actually, cost of goods sold is a direct expense and as an expense is a temporary account w hich expired withi n one year. A temporary account can not has b ala nce like a permanent account. Is Cost Of Goods Sold An Expense Or A Contra Revenue Account? Cost of sales is not a Contra Revenue Account . It is a direct expense account and it is deducted from Sales in Income Statement . Cost Of sales Is An Example Of What Type Of Expenditure It is an example of Revenue Expenditure as it is incurred to meet day to day expenses.

A Special Journal Used For Recording All Merchandises Purchased On Account / Used To Record Purchase Of Merchandise On Account Purchases Journal is used for recording all items / goods purchased on account or on credit. Example: Mr. A is a sole owner of his business. On 5 th August, 2021, Mr. A Purchased Items Worth Rs. 30000 from Mr. B on account. This is a transaction and should be recorded in Purchases Special Journal. The journal entry to record is shown below:                                                                                Purchases a/c  30000                                                             ...

Stockholders' Equity Is Decreased By All Of The Following Except Sales Of Stock. Expenses. Net Losses. Dividends. Why Does Revenue Increase Owner's Equity / Why Do Expenses Decrease Owner's Equity Owner’s Equity / Stockholders’ Equity is decreased by Expenses , Net Losses and Dividends ( Drawings Account in case of Sole Proprietorship or Partnership) but not by Sales of Stock (which is a Revenue ) as sales of stock (additional capital introduced or additional investment made in case of Sole Proprietorship and Partnership) is an inflow of cash for the business which means that now the business / corporation has more cash to investment in the business, so ultimately equity increases. On the other hand, Expenses decrease stockholders’ equity as there is an outflow of the cash for the business and now the business has less cash to invest in the business. From Expanded Accounting Equation , we can see that revenues are added to equity while expenses are deducted f...