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Hallo,
I read that in the trial balance:
1. accrued income is a debit
2. rental income and accruals are a credit1Q: what is the difference between accrued income and accruals? Is the accruals referring to income as well, or only to expense, which hasn’t occurred yet?
2Q: is the difference between the accrued income and the rental income, only that the accrued income is rental income which hasn’t been yet received?Thank you!
The word ‘accruals’ on its own always means accrued expense (i.e. an expense that has been incurred but has not yet been paid).
Yes – accrued income is income for this year that has not yet been received.
Hallo,
so, then why is the accrued income a debit (when generally income has a credit balance) in the trial balance – because it is owed to us, but then is it an asset, but it can’t be an asset, as it is income?
And why accruals, if this is expense is not a debit in the trial balance, but a credit, is it treated like a liability?
Thank you!
The double entry for accrued income for rent is to debit accrued income (because it is owing to us) and credit rent (because it is income).
The double entry for an accrued expense for rent is to debit rent (because it is an expense) and credit accrued expense (because it is owing by us).
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