Do You Debit Or Credit Revenue

This is also called a contra account the opposite of a standard account debit and credit accounts.

Do you debit or credit revenue. Let s illustrate revenue accounts by assuming your company performed a service and was immediately paid the full amount of 50 for the service. You had 280 000 in deductible business expenses. Let s say you earned 300 000 last year. Notice the two outside ones assets expenses are the debits.

Expense debit credit. All this is doing is increasing and decreasing balances. Do not think about the affect on the overall. You will increase debit your accounts receivable balance by the invoice total of 107 with the revenue recognized when the transaction takes place.

So you will generally be taxed on 20 000 not 300 000 and that tax bill will be lower thanks to those expenses. Cost of goods sold is an expense account. Hence contra revenue accounts will have debit balances. For example if items are sold and posted as revenue but then returned the revenue must be debited.

The three inside ones are the credits. The term debit revenue refers to the act of posting a debit to a stream of revenue. Even though a liability seems like a.