Query relating to journal entries

This query is : Resolved

vinoth (Querist)
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25 December 2013 could any one say entries and explanation for prepaid expenses outstanding expenses income received in advance accrued income.... Thanks in advance......

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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02 January 2014 1. Prepaid expenses

Prepaid expenses A/c Dr
To Bank A/c

Since the payment has been made but expense is not incurred it is an asset.

Next year
Expenses A/c Dr
To Prepaid Expenses

2. Outstanding expenses

Expense A/c Dr
To Expense Outstanding

Since expense has been incurred but payment has not been made, it is a liability.

Next year

Expense Outstanding A/c Dr
To Bank

3. Advance income

Bank A/c Dr
To Advance Income

Since amount has been received, but sale has not been made/ service has not been provided, it is our LIABILITY to supply the goods/provide the service.

Next year

Advance income A/c Dr
To Income