Accrued Revenue MADE EASY | Adjusting Entries

So do I understand correctly that if one bills/sends an invoice at the same moment of the delivery of the goods or services it will be a debit of the accounts receivable and there would be no accrued revenue? Or do they exist next to eachother?

Very informative series. I bought the cheat sheet too. Good work ma'man.

How is it different from sales in excess of invoicing/billing for point-in-time revenue recognition?

why do accounting teachers not explain things like this, so simple, so understandable, so clear

So the accrued revenue will become the receivables as and when you rise the invoice? Is that the only difference between the receivables and accrued revenue?

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Possible dumb question: Would AR also include the amounts of open invoices for future goods/services? Example: a customer orders a $500 plane ticket that departs in September, and I send a net 30 invoice in July. Would you debit AR and credit unearned revenue?

It just seems odd to describe an invoice for future services as an “asset”. Am I missing something?

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If in the end you invoice 600 I guess you still credit accrued revenue by 500 and you credit your revenue by 100 while debiting accounts receivable by 600? But if your final invoice is 400, there will be an access balance of 100 in the accrued revenue, how do you handle that i.e. a dead asset that can no longer be converted to "cash"?

Are income, revenue,gain,profit and expenses,losses same?

Wow excellent work in the explanation. It’s so much easy to get this when you said “hold it temporarily in the BS”

Those charts which you are showing. I would like to purchase them. Can you make them available for us to buy in India. In Indian currency?? Thanks

Thank you

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Hey :) is this content and your cheatsheets relevant in Australia?

Good Explanation but adjustment entries always difficult in modern accounting softwares.

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Hello,

I have a question.
If the company received a good in June, the company paid the invoice in June but by error the invoice was posted only in July. Should I do a adjusting entry?

Thanks

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Thanks

Just got through this whole mini series, wow, very nice! I can’t help but want to find some middle ground between the cash basis and the accrual basis, but not that modified cash/accrual basis that government entities use. Here is an idea that I cannot get out of my head: IBR basis. The IBR basis (Invoice-Bill-Receipt basis) recognizes revenue when an invoice or sales receipt is generated and recognizes expenses when a bill or purchase receipt is generated. This would eliminate the need for these adjusting entries, and would place the focus back on the accounting triggers themselves. I argue that the focus should be placed on the accounting triggers, especially when focusing on the accruals side of this mini series, and the reason is that for those who have seller/buyer relationships on account, you wouldn’t and shouldn’t expect cash to change hands until after an invoice/bill is created. I’m interested to hear the communities response!

Thank you, this was extremely helpful and I appreciate you putting this out

So im a little confused on one thing. If say the invoice ended up being 450 instead. Youd be left with 50 in Accrued revenue. So if you then credit that back out and debt it back to revenue youd show 1 month earnings off 500 just to then show a loss of 50 the next. If were reporting when earned then wouldnt the 500 earned be a lie? Since we actually only made 450 then?

Sorry just trying to wrap my brain around a few more examples so i understand ALL of the basics it applies to how i record keep

I'm making accrual adjusting entries for an audit, and the accrual expense/revenue videos are priceless in helping me take the right steps. Thank you!

You are a literal life saver. I appreciate you taking the time to explain the concepts slowly and carefully, wouldn't have made it through ACC2430 with out you thank you!

You're a fantastic teacher. I wouldn't be making it through my course without your videos. Thank you!

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This series has been extremely helpful - thank you so much

What different between accrued revenue and account payable

I am taking Accounting courses online and I am so happy to have found your channel. Seeing it as you put it up in your videos are a huge help! Thank you.

Hi James, lovely videos! Thank you so much.
I was wondering why you skipped the posting step. I agree that the initial entry would be:
DR Accrued Revenue
CR Sales Revenue
as mentioned.
However, would I be right by saying, when the invoice is raised by the website builder, the posting should be:
DR Account Receivables (BS)
CR Sales Revenue (P&L)
as per normal.
Then journal entry adjustments would be:
DR Sales Revenue (To remove the duplicate entry)
CR Accrued Revenue (To remove this asset from the Balance Sheet)?

I am having trouble with these:
1. Sales earned but not billed yet, $3200
2. Additional $400 in sales salaries has been accrued, but not yet recorded
3. Physical count of merchandise inventory on June 30 is $19,840.

Please help

I'm currently a 12th grade student learning accounting. Your videos helped me a lot in understanding the complexity of the subject. I've also got pretty high grades so thank you!!

Genius!

thnx

i enjoyed this one, the cloud in my mind started to clear on this episode. Thank you!

Explained very nicely and simpler way

where did the account receivables come from?

This is terrific James. I've been struggling with adjustments on the old multicolumn worksheets. So showing us your T accounts has been so helpful to my learning. GREAT VIDEO!

Please do Purchase and Sale Returns. Would be a great help

Great Stuff! You are one talented guy.

Thanks for all the hard work you put into explaining accounting. Super impressed with how effective and efficient your teaching style/ accounting logic is.. really helped out. This is a subject in finance that often gets underappreciated yet it's essential. Much respect

How about the "DEPRECIATION"? Is it accrued?

Would someone please explain why those different answers between Q1 and Q2
Q1 - A department store sells gift certificates that may be redeemed for merchandise. Each certificate expires 3 years after issuance. The revenue from the gift certificates should be recognized (Answer : In the period the certificates are redeemed or in the period they expire if they are allowed to lapse.)

Q2-An entity sells a durable good to a customer on January 1, Year 1, and the customer is automatically given a 1-year warranty. The customer also buys an extended warranty package, extending the coverage for an additional 2 years to the end of Year 3. At the time of the original sale, the company expects warranty costs to be incurred evenly over the life of the warranty contracts. The customer has only one warranty claim during the 3-year period, and the claim occurs during Year 2. The company will recognize income from the sale of the extended warranty (Answer : In Year 2 and Year 3.)

Why Q1 answer revenue is recognized @ end of period, while in Q2 evenly over 2 years, Im so confsued, please help !!

bought the cheat sheet!

Just bought your cheat sheet bundle. Please continue showing examples in quickbooks online for the small business owners out here watching your videos. Thanks!