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Action | Accrual | Cash Basis |
Deposit is recorded | DR......Receivables (Dep) CR.....Unearned Revenue | No accounting effect |
Invoice is created | DR.....Receivables (Inv) CR.....Revenue | No accounting effect |
Deposit is applied to an invoice | DR.....Unearned Revenue CR.....Receivables (Inv) | No accounting effect |
Invoice is adjusted to write off bad debt | DR.....Bad Debt CR.....Receivables | No accounting effect |
Payment is received from customer against an invoice | DR.....Cash CR.....Receivables | DR........Cash CR........Revenue |
Credit memo is created against an invoice | DR.....Revenue CR.....Receivables | No accounting effect |
Table 1 - 98. (Table 1 of 1) |
Note: The only time a journal entry is created is when cash is actually received. The revenue account is credited at this time. The intermediate receivables account is never debited or credited in cash basis accounting. The net effect remains the same in both cases (for example, when a transaction is closed, cash is debited, and revenue is credited).
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