Examples of Accounting Entries for Invoicing Rules
These examples illustrate how the In Advance and In Arrears invoicing rules recognize receivables.
In Advance Accounting Entries
This example shows how you can use the In Advance invoicing rule to recognize your receivable immediately.
You receive an invoice payment for $3,000. The invoicing rule is In Advance, and the revenue scheduling rule is 3-month fixed duration. Over the course of three months, your accounting entries are as follows:
January
Account |
Debit |
Credit |
---|---|---|
Receivables |
$3,000 |
None |
Unearned Revenue |
None |
$3,000 |
Unearned Revenue |
$1,000 |
None |
Revenue |
None |
$1,000 |
February
Account |
Debit |
Credit |
---|---|---|
Unearned Revenue |
$1,000 |
None |
Revenue |
None |
$1,000 |
March
Account |
Debit |
Credit |
---|---|---|
Unearned Revenue |
$1,000 |
None |
Revenue |
None |
$1,000 |
In Arrears Accounting Entries
This example shows how you can use the In Arrears invoicing rule to record your receivable at the end of the revenue recognition schedule.
You receive an invoice payment for $3,000. The invoicing rule is In Arrears, and the revenue scheduling rule is 3-month fixed duration. Over the course of three months, your accounting entries are as follows:
January
Account |
Debit |
Credit |
---|---|---|
Unbilled Receivables |
$1,000 |
None |
Revenue |
None |
$1,000 |
February
Account |
Debit |
Credit |
---|---|---|
Unbilled Receivables |
$1,000 |
None |
Revenue |
None |
$1,000 |
March
Account |
Debit |
Credit |
---|---|---|
Unbilled Receivables |
$1,000 |
None |
Revenue |
None |
$1,000 |
Receivables |
$3,000 |
None |
Unbilled Receivables |
None |
$3,000 |