Sales are recorded as a credit because the offsetting side of the journal entry is a debit – usually to either the cash or accounts receivable account. In essence, the debit increases one of the asset accounts, while the credit increases shareholders’ equity. These offsetting entries are explained by the accounting equation, where …
The normal balance of an account is the way that an accountant can increase a specific account when a transaction has happened. The opposite balance of the normal is the way that the account is decreased. Retained Earnings are credited with the Net Profit earned during the current period. These contractual or voluntary restrictions or […]
Nevertheless, once the prepaid rent has been used up, exhausted, or expired, the expense is recorded on the income statement. When looking at the definition of an asset, recall that an asset is considered to be something that provides a current, future, or potential economic benefit for an individual or company. It is something that […]
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Another part of the transaction will increase the fee earned which is the revenue on the income statement. Fees earned is a revenue account that appears in the revenue section at the top of the income statement. It contains the fee revenue earned during a reporting period. Since the service was performed at the same […]
As such, this liability is increasing, as Jaclyn now owes that money to her supplier. Automate data capture, build workflows and streamline the Accounts Payable process in seconds. The company pays an outstanding vendor invoice of $500 that was previously recorded as an expense. The company originally paid $4,000 for the asset and has claimed …