Accounting entries for accruals is important for determining the exact balance in an account. In Accrual Accounting, revenue is recognized (recorded) in the period revenue is earned, realized, or realizable. Revenue is recognized prior to cash being received. When the goods or services are delivered or provided, revenue is recognized. Cash is realized (received) or cash is realizable (expected to
. be received in the future). Expenses are recognized during the period the related review is recognized. Expenses are recognized prior to cash being paid. Example: TV Techs repairs a television in June. At the end of the month, the customer has not paid for nor picked up the television set. The cost to repair the television is $90.00. TV Techs would record both accounts receivable (debit) and revenue (credit) as $90.00. The customer picks up and pays for the television in August. TV Techs would record Cash as $90.00 and credit accounts receivable for $90.00 since payment was received. The revenue or expense is recorded one time only during the month received. For more information about accounting entries for accruals, refer to: http://www.moneyinstructor.com/lesson/adjenteries.asp.
