Incomes Received in Advance :

Income received during a particular accounting period for the work to be done in future period is called as income received in advance.

Example: Trial Balance for the period ending 31st March, 2004shows Rent received Rs.25,000. Adjustment: Rent received in advance
Rs.5,000.

Adjusting Entry

Date	Particulars	L.F	Debit Rs.	Credit Rs.
2004	Rent received A/c                                                                                  Dr		5,000
31-Mar	To Rent received in advance A/c			5,000
	(rent received in advance)

 

Incomes received in advance will be shown

i) on the credit side of the Profit and Loss account by way of deducting from the particular income and

ii) on the liabilities side of the Balance sheet.

Profit & Loss Account
for the year ending 31st March, 2004

Dr.                                                                                                                                                                                                                                                Cr.

Particulars	Rs.	Rs.	Particulars	Rs.	Rs.
			By Rent received	25,000
			Less: Rent received in advance	5,0 00
					20,000

 

Balance Sheet as on 31st March, 2004

liabilities	Rs	assets	Rs.
Rent received in advance	5,000