What is unearned Income ? Accounting with example.

What is Unearned Income? In Accounting term,Unearned incomes are those Incomes That are received but not earned.The term has a different meaning in tax perspective, Income derived from other than personal effort such as dividend, interest etc. Here we are considering unearned income as an accounting term and its accounting process. Examples of Unearned Income We can explain unearned income in accounting as an Income received during a period but applicable to the next period is termed unearned income.Suppose for

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What is accrued Income?

An income which is due but not received on the date of closing the books is known as accrued income. For example,when the books are closed on 31st march March 2016,Interest on certain securities has fallen due. 2500. But the  interest received is only 2000; So the accrued  interest amounts to 500.Before the books are closed,the income account should be credited with this additional 500,and an asset account should be debited with the income receivable.The adjusting journal entry will be made

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What is prepaid expense?

Prepaid expense are future expenses that have been paid in advance and its benefits are yet to be received . A prepaid expenses arises when the amount is paid in advance for the goods or services to be received in future. Hence prepaid expenses are treated as an asset of the organisation and  its value written down as expense or charged to profit and loss account; after getting its benefits either monthly or yearly. Certain expenses like insurance premium,rent rates

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Outstanding Expense & Journal entries

The outstanding expenses are those expense which are due but not paid. In order to know the exact business result such expenses are accounted in the period as it occurred. The amount shown against an expense item in the trail balance represents the amount actually paid, and if any amount remains unpaid on account of an expense correctly attributable to the given period,such unpaid or outstanding expenses should be adjusted in the accounts before the final accounts could be correctly drawn

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