Revenue Accounts In Accounting

After the end of the year financial statements are prepared you will see that the income statement accounts revenue accounts and expense accounts will be closed or zeroed out and their balances will be transferred into the retained earnings account.

Revenue accounts in accounting. Revenue recognition is a generally accepted accounting principle gaap that identifies the specific conditions in which revenue is recognized and determines how to account for it. This is advantageous from a cash flow perspective for the seller who now has the cash to perform the required services. Other revenue for example interest income 8000 8999. When a customer makes payment an accountant for.

Unearned revenue is money received from a customer for work that has not yet been performed. The revenue account is an equity account with a credit balance. Other account titles may be used depending on the industry of the business such as professional fees for professional practice and tuition fees for schools. Examples include revenue from sales revenue from rental incomes revenue from interest income etc.

As shown in the expanded accounting equation revenues increase equity. List of revenue accounts. An associated accrued revenue account on the company s balance sheet is debited by the same amount potentially in the form of accounts receivable. Revenue accounts are designed to store different types of sales transactions.

Cash computer systems. Assets liabilities equity revenue or income and expenses to fully understand how to post transactions and read financial reports we must understand these account types we ll define them briefly and then look at each one in detail. Types of revenue accounts. Cost of goods sold 6000 6999.

Revenue accounts are those accounts that report income of the business and therefore have credit balances. Expense accounts 7000 7999. There are various operating non operating accounts such as sales account. An organization can generate many kinds of revenue so it makes sense to record them within different accounts this is done in order to generate reports that aggregate revenue by type for further management analysis.

It is the principal revenue account of merchandising and manufacturing companies. Tangible and intangible items that the company owns that have value e g. Sales revenue from selling goods to customers. This will mean the revenue and expense accounts will start the new year with zero balances.

Other expense for example income taxes by separating each account by several numbers many new accounts can be added between any two while maintaining the logical order. Unearned revenue is a liability for the recipient of the payment so the initial entry is a debit to the cash account and a credit to the unearned revenue account. Unlike other accounts revenue accounts are rarely debited because revenues or income are usually only generated. Revenue accounts 5000 5999.