Revenue of Accounting

8/11/2019 Revenue of Accounting

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Accounting


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Tehmina Ashfaq

F10ba003Fariha Nasir

F10ba045

Hira farooq

F10ba011

Mariam Bashir

F10ba018

Gohar Shaheen

f10ba016Sidra Taj Din

f10ba012


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The amount business charges

customers for products sold

or services performed


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Example :

Delivery fee

Repairing fee

Service fee


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evenue increase both assets and owners

equity

Assets Liabilities Owner's Equity

Cash Deli.Equip

Accountpayable

OwnersCapital

Revenues description

$ 500 $ 2100 600

+500

1000 2100 600

+ $ 500

$ 500

Deliv.fees


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evenue recorded on the credit side of

owners c pit l ccount.

Owner's Capital

Debit(-)

Credit(+)

Revenues

Debit(-)

Credit(+)


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It arises from the trading

activities of a business

It creates inflow of funds to the

businessIt is measured in terms of money


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It is always related to a particularaccounting period

It is a result of a series revenue

generating activities

Capital is the source of revenue


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Operating revenues are those

that originate from main

business operations.

For example : Sales etc.


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Non-operating revenues are

earned from some side

activity.

For example

: Interest Revenue

Rent Revenue


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These are used to record the

interest earned by the

business.


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Rent revenue is the revenue

from buildings or equipment

of the business on rent.


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Business revenue is income from

activities that are ordinary for a

particular corporation company

partnership or sole-proprietorship.


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For some businesses such as

manufacturing or grocery most

revenue is from the sale of

goods.


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In Accrual Accounting impact ofbusiness transactions are recorded when thetransaction occurs. Revenues are recognized

when earned.

In Cash Accounting transactions arerecorded when cash is received or paid.

Revenues are recorded when cash is received


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Accrued Revenue

Accrued revenues are used for transactions inwhich goods and services have beenprovided, but cash hasn't yet been received.

A common accrued revenue situation isinterest that has been earned but not yetreceived.


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Accrued Revenue

Account Receivable debit

Accrued Revenue credit

When the amount is received, then the entrywill be

Cash debit

Account receivable credit


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The accounts are called

contra revenue accounts that

have exactly opposite

characteristics of revenue

accounts.


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Sale Returns and Allowances

Sale return.

A purchaser may be dissatisfied with themerchandise received because the goods aredamaged or defective, of inferior quality, or donot meet the purchasers specifications

Sale allowance.

A purchaser may choose to keep themerchandise if the seller is willing to grant an

allowance (deduction) from the purchase price


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Sales return debit

and allowances

Cash /Account Receivable credit

Sale Returns and Allowances


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Sale Discounts

A cash discount offered by the seller isknown as Cash discount.

cash debit

Sales discount debit

Account Receivable credit


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Principles of revenue


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In a service enterprise

revenue is considered to be

earned at the time the service

is performed .


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The matching principle is a culmination

of accrual accounting and the revenue

recognition principle. They both

determine the accounting period in

which revenues and expenses are

recognized


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What Is Annual Revenue?

Annual revenue is defined as

the total income generated

from the sale of goods or

services in one financial year

by an organization profit or

non-profit.


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For the closing of revenue accounts

we require an other account called

income summary account


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The income summary

account is a temporary

account used only during the

closing process.


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It contains :

All the company's revenues andexpenses for the current accounting

time period.

It contains net income.The income summary account is

never used when preparing the

financial statementIts only purpose is to be used during

the closing process.


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Owners Equity

Account

IncomeSummary

RevenueAccount


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Date post:	03-Jun-2018
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Revenue of Accounting

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