INCOME AND REVENUE PART 3

I have EARNED the income when

• I received the cash

• I have done the job/service

I rented out a room for $2000/mth. For March I received $4000 cash.

Rental income (March) =

• $2000

• $4000

I rented out a room for $3000/mth. I received cash $4000.

• rental income RECEIVABLE = $1000

• rental income RECEIVED IN ADVANCE = $1000

I rent out a room for $3000 a month. I received cash $2000.

• rental income RECEIVABLE = $1000

• rental income RECEIVED IN ADVANCE = $1000

Cash RECEIVED = Income EARNED

• True

• False

Rental income EARNED = $4000. There was rental income RECEIVABLE of $1000.

Cash RECEIVED =

• $4000

• $5000

• $3000

Business activities that have occurred, regardless when cash was received or paid, are recognised in the relevant accounting period.

• Accounting Entity

• Accrual basis of accounting

Income RECEIVABLE =

• current ASSET

• current LIABILITY

income RECEIVED IN ADVANCE =

• current ASSET

• current

  LIABILITY

to CLOSE a rental income account (Step 4)

• DR rental income

  CR income summary

• DR income summary

  CR rental income