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What effect does recognizing accrued interest revenue at the end of the accounting period have on the accounting equation?
Recognizing accrued interest revenue at the end of the accounting period increases both assets and equity in the accounting equation. Specifically, it raises the accounts receivable (an asset) because the revenue has been earned but not yet received. Simultaneously, it increases retained earnings within equity, reflecting the increase in revenue for the period. This maintains the balance of the accounting equation: Assets = Liabilities + Equity.
How does rendering of services for cash affect the accounting equation?
cash assets increase Equity increases as sales revenue increases and net income increases. No effect on Liabilities and Expenses
Are commissions earned debit or credit?
Commissions earned are typically recorded as a credit in accounting. When a business earns commission income, it increases revenue, which is reflected as a credit in the income statement. Conversely, any expenses related to earning that commission would be recorded as debits.
When is revenue reconized in accurual accounting?
Revenue is recognized when it is incurred in accrual accounting while in cash based accounting revenue is recognized when actual cash is paid
Does a credit to a revenue account increase or decrease an account?
A credit to a revenue account increases the account. In accounting, revenue accounts typically have a normal credit balance, so when a revenue account is credited, it reflects an increase in earnings. Conversely, debiting a revenue account would decrease it.
How does rendering of services for cash affect the accounting equation?
cash assets increase Equity increases as sales revenue increases and net income increases. No effect on Liabilities and Expenses
Are commissions earned debit or credit?
Commissions earned are typically recorded as a credit in accounting. When a business earns commission income, it increases revenue, which is reflected as a credit in the income statement. Conversely, any expenses related to earning that commission would be recorded as debits.
Can you explain how transactions are debited or credited in accounting?
In accounting, transactions are debited or credited based on the accounting equation, which states that assets must equal liabilities plus equity. When a transaction increases assets or expenses, it is debited. When a transaction increases liabilities, equity, or revenue, it is credited.
When is revenue reconized in accurual accounting?
Revenue is recognized when it is incurred in accrual accounting while in cash based accounting revenue is recognized when actual cash is paid
Does a credit to a revenue account increase or decrease an account?
A credit to a revenue account increases the account. In accounting, revenue accounts typically have a normal credit balance, so when a revenue account is credited, it reflects an increase in earnings. Conversely, debiting a revenue account would decrease it.
The revenue recognition principle dictates that revenue should be recognized in the accounting records?
The revenue recognition principle dictates that revenue should be recognized in the accounting records when it is earned.
Is revenue the gross increase in equity from a company's earning activities?
Yes, revenue is the gross increase in equity from a company's earning activities.
Largest single source of the government earning from the tax revenue?
earning tax
Are revenue accounts increased on the debit side or credit side?
Revenue accounts are increased on the credit side. In accounting, revenues are recorded as credits because they represent income earned by a business. When a company earns revenue, it increases its equity, which is reflected by crediting the revenue account. Conversely, to decrease a revenue account, it would be debited.
Describe how an accurral accounting deferent fom cash accounting?
Accrual accounting records an expense/revenue in the period the transaction occurs. Cash accounting recognizes and expense/revenue when cash is exchanged.
What is an application of accrual accounting?
An application of accrual accounting is the notation of expenses as opposed to revenue earned in the same period. Revenue is only shown when it is realized or expected. In accrual accounting assets minus liabilities equals revenue.
Does an increase in revenue always lead to an increase in equity?
Incresea of revenue increases the equity only if business earn profit but if rising revenues are also backed by rising expenses and in the end if company earning loss then it will cause in decrease in equity.
