Prepaid Service Revenue Journal Entry

Prepaid expenses are those expenses for which cash is paid in advance but if there is no cash payment then that is not prepaid expense and hence no entry required.

Prepaid service revenue journal entry. As entry is passed for every transaction in the business accrued revenue also has its journal entry in the books of accounts. The perks of such expenses are yet to be utilised in a future period. So in this transaction we will treat three accounts with the modern rules of accounting shown as following. In this article we will try and understand the concept of accrued revenue and also the journal entries and the accounting transactions which are related to it.

Below is the journal entry for prepaid expenses. Example advance rent from its tenant of 10 000 entry at the time of receiving advance 1. According to the three types of accounts in accounting prepaid expense is a personal account. It can be better understood with the help of an example.

Journal entry for prepaid expenses. On 01 08 2017 rent received for the let out building for the period of one year in advance. The journal entry 3. Income received in advance but which is not yet earned or receives cash in advance before it provides goods or render services.

Before diving into the wonderful world of journal entries you need to understand how each main account is affected by debits and credits. Prepaid expenses are those expenses which are paid in advance for a benefit yet to be received.