Accrual
Definition: Recognize before cash exchanged
Scope:Very BroadDifficulty:Easy
Recognize before cash exchanged
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Accrue revenue | ||
| Services performed but not yet billed: $5,000. | ||
| Accounts ReceivableAsset+ | $5,000 | |
| Service RevenueRevenue+ | $5,000 | |
| Revenue recognized when earned, before cash is received. | ||
| 2. Accrue expense | ||
| Salaries owed but not yet paid: $3,200. | ||
| Salaries ExpenseExpense+ | $3,200 | |
| Salaries PayableLiability+ | $3,200 | |
| Expense recognized when incurred, before cash is paid. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Accounts ReceivableAsset account — amounts owed by customers. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$5,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$5,000.00
Service RevenueService RevenueRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$5,000.00
Normal bal. ▶
$5,000.00
Salaries ExpenseSalaries ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$3,200.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$3,200.00
Salaries PayableSalaries PayableLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$3,200.00
Normal bal. ▶
$3,200.00
DurationN/A
External Links
- Accrual — Wikipedia