Accrued Revenue MADE EASY | Adjusting Entries

[@AccountingStuff]

That's a wrap on the Adjusting Entries mini-series! You can find links to each video right here: ▪ Intro to Adjusting Entries → kzbin.info/www/bejne/fmGxaKesjdp9orc ▪ Prepaid Expenses → kzbin.info/www/bejne/iHaaqKWcoauCfaM ▪ Deferred Revenue → kzbin.info/www/bejne/fGLdf4RnrMyUbdE ▪ Accrued Expenses → kzbin.info/www/bejne/b5K9Z3Z5n5Kcm9U ▪ Accrued Revenue → kzbin.info/www/bejne/bZrFf2Vri6ipfMk ▪ WHOLE PLAYLIST → kzbin.info/aero/PL5zKSeS09l31dhHvwhS4sVjcckQSPGqtp

[@Logos3432-t5n]

Error, "Accrued Revenue..."earnt for the client we haven't built for client,". Should be "billed"?

[@AccountingStuff]

Yes it should be billed@@Logos3432-t5n

[@bellamatela4273]

I must say, you are good! You explained in less than 10 minutes what took my lecturer 2 hours.

[@AccountingStuff]

Thanks Bella!

[@kgabisopoto5039]

Honestly

[@sallyho146]

@@AccountingStuffwe don’t have an accrued account. So I booked it in the Other AR non ledger account. My accounting manager boss told me to book it in the AR sub ledger account 😂. Btw, where do you group your accrued revenue account in assets section? Under current asset section or else

[@jacksingarajah]

You gotta respect the filming and editing put into this. Respect my guy

[@AccountingStuff]

Cheers Jack :)

[@soemoe8237]

You made accounting very interesting. You're a great teacher. Very clear, precise and entertaining. Your channel is the best accounting channel on KZbin. Thanks, James! This series hasn't finished yet, right?

[@AccountingStuff]

Thanks Soe! Yes, the Adjusting Entries Mini-Series is complete. But plenty more Accounting vids coming soon

[@jakeelder8830]

You are a literal life saver. I appreciate you taking the time to explain the concepts slowly and carefully, wouldn't have made it through ACC2430 with out you thank you!

[@ilayda9067]

I LOVE your examples, really makes the things way easier to remember!

[@AccountingStuff]

That's great to hear, thank you!

[@niloykarmaker1024]

HANDS DOWN!! THIS IS THE BEST KZbin CHANNEL! PRODUCTION LEVEL......INTERACTION LEVEL....HELPFUL!! WHAT MORE I CAN ASK FOR! LOVE FROM BANGLADESH!

[@AccountingStuff]

Haha, thanks mate! Best wishes from Canada

[@niloykarmaker1024]

@@AccountingStuff so you are from CANADA? I thought you are an AMERICAN.

[@a.c.n.9421]

Seriously!!!

[@AccountingStuff]

@@niloykarmaker1024 I'm from the UK but I live in Canada

[@niloykarmaker1024]

@@AccountingStuff hmm.. now it goes with your akcent.

[@wayatanka6085]

Thanks for all the hard work you put into explaining accounting. Super impressed with how effective and efficient your teaching style/ accounting logic is.. really helped out. This is a subject in finance that often gets underappreciated yet it's essential. Much respect

[@AccountingStuff]

Thanks for your kind words!!

[@dalenapier2956]

I'm making accrual adjusting entries for an audit, and the accrual expense/revenue videos are priceless in helping me take the right steps. Thank you!

[@abirsadafofficial]

Please make a video on UNEARNED REVENUE VS OUTSTANDING REVENUE! LOVE FROM BANGLADESH IN ADVANCE

[@AccountingStuff]

Hey Abir, cheers for the suggestion!!

[@kimzzz3]

I just want to say you helped me a lotttt, I already watched half of your videos. You were able to explain accounting stuffs easily. More videos to come James, thank you so much. More subscribers to come🥳

[@AccountingStuff]

Thanks Kim, more videos are coming soon :)

[@TheBandi17]

Man I love you, you're a legend. Honestly don't know what I would have done at my exams without you. And I start enjoying accounting now ! Thank you so much

[@AccountingStuff]

Cheers Cyril! Hope the exams went well!!

[@pabloavila6397]

Accounting aside, these videos are insane. The amount of effort being put into them is remarkable. Congrats homie

[@AccountingStuff]

Cheers Pablo!

[@theMOCmaster]

This is as far as my class goes thanks for everything!

[@AccountingStuff]

No worries, you're very welcome! All the best

[@lindadowling6702]

I am taking Accounting courses online and I am so happy to have found your channel. Seeing it as you put it up in your videos are a huge help! Thank you.

[@kondwanibarton1391]

OMG! Where have you been all my life 💃💃 Thanks

[@roxy505]

You're a fantastic teacher. I wouldn't be making it through my course without your videos. Thank you!

[@HectorGarciaCPA]

purchased it... love that you are monetizing!

[@AccountingStuff]

Cheers Hector!

[@TheRealFlacus]

you should do financial statement analysis next... vertical & horizontal analysis, etc.

[@AccountingStuff]

Hey Giancarlo, cheers for the suggestions!!

[@flaviofeniello]

Each video is very useful to improve my English and in particular Accountung English! Many thanks, greetings from Italy

[@AccountingStuff]

Glad to hear it Flavio! All the best from Canada

[@bg048]

Love your videos! This channel definitely needs more attention! It would be awesome if you made a video on the closing process!

[@AccountingStuff]

Thanks for your suggestion!

[@elieldan1997]

why do accounting teachers not explain things like this, so simple, so understandable, so clear

[@AccountingStuff]

Glad you found it useful!

[@via624]

watching this last minute at 12am so i don't fail tomorrow HDKSJS

[@AccountingStuff]

Good luck in your exam!!

[@gordwilkes]

This is terrific James. I've been struggling with adjustments on the old multicolumn worksheets. So showing us your T accounts has been so helpful to my learning. GREAT VIDEO!

[@nasseryousif1222]

Whats the difference between accrued revenue and accounts receivable ??

[@darkshinigami9438]

Can you please make a video about account receivables that are not received and the bad debt thing?

[@AccountingStuff]

Thanks for your request!

[@maressamelo7635]

Hello, I have a question. If the company received a good in June, the company paid the invoice in June but by error the invoice was posted only in July. Should I do a adjusting entry? Thanks

[@Niaax_09]

Thank you so much!!! Your vids got me an A in my midterms. I have my finals tomorrow and I’m super nervous but your videos are helping a lot!!!!!!

[@AccountingStuff]

Good luck!!!

[@AC_Blanco]

Bought! Will come very handy next year for Financial Reporting module 👍🏻

[@AccountingStuff]

Legend!

[@raed666n]

Would someone please explain why those different answers between Q1 and Q2 Q1 - A department store sells gift certificates that may be redeemed for merchandise. Each certificate expires 3 years after issuance. The revenue from the gift certificates should be recognized (Answer : In the period the certificates are redeemed or in the period they expire if they are allowed to lapse.) Q2-An entity sells a durable good to a customer on January 1, Year 1, and the customer is automatically given a 1-year warranty. The customer also buys an extended warranty package, extending the coverage for an additional 2 years to the end of Year 3. At the time of the original sale, the company expects warranty costs to be incurred evenly over the life of the warranty contracts. The customer has only one warranty claim during the 3-year period, and the claim occurs during Year 2. The company will recognize income from the sale of the extended warranty (Answer : In Year 2 and Year 3.) Why Q1 answer revenue is recognized @ end of period, while in Q2 evenly over 2 years, Im so confsued, please help !!

[@cellomon09]

Possible dumb question: Would AR also include the amounts of open invoices for future goods/services? Example: a customer orders a $500 plane ticket that departs in September, and I send a net 30 invoice in July. Would you debit AR and credit unearned revenue? It just seems odd to describe an invoice for future services as an “asset”. Am I missing something?

[@darksiaxx]

So im a little confused on one thing. If say the invoice ended up being 450 instead. Youd be left with 50 in Accrued revenue. So if you then credit that back out and debt it back to revenue youd show 1 month earnings off 500 just to then show a loss of 50 the next. If were reporting when earned then wouldnt the 500 earned be a lie? Since we actually only made 450 then? Sorry just trying to wrap my brain around a few more examples so i understand ALL of the basics it applies to how i record keep

[@annakelly7214]

Hi, brilliant stuff, very helpful while I study financial accounting. Any chance for similar videos on IRRECOVERABLE debts and irrecoverable debts paid as well as ALLOWANCES for Receivables?

[@AccountingStuff]

Hey Anna, thanks for your suggestions!

[@salihkaratas33]

If in the end you invoice 600 I guess you still credit accrued revenue by 500 and you credit your revenue by 100 while debiting accounts receivable by 600? But if your final invoice is 400, there will be an access balance of 100 in the accrued revenue, how do you handle that i.e. a dead asset that can no longer be converted to "cash"?

[@muhammadasadmalik4669]

Is there a way to memorize the difference between Accrued Revenue and Unearned Revenue? I've watched all four videos adjusting entries just a while ago. I just can't differentiate between the two on first thought. The only way I have come up is; Accrued Revenue is an Asset and Unearned Revenue is a Liability.

[@AccountingStuff]

Accrued Revenue is Revenue that has been earned but not Invoiced yet, whereas Unearned Revenue occurs when payments are received before the work is done

[@hariprasadradhakrishnan8967]

Those charts which you are showing. I would like to purchase them. Can you make them available for us to buy in India. In Indian currency?? Thanks

[@dt5999]

How to keep this in spreadsheet in a big company, with lots of accrued revenue. The spreadsheet without formulas including to prepare monthly journal looks messy and is time consuming :(

[@NaveedKhan-ic3km]

Good Explanation but adjustment entries always difficult in modern accounting softwares.

[@titoarce6983]

The longing cancer problematically separate because theory geometrically glow outside a productive custard. talented, strange rowboat

[@Alphawaveshipping]

Hi James i am abit confused with entry of sales invoice, when the sales invoices is posted then revenue will be credited again in july and it will be double entry unless we debit revenue and credit the accured revenue to nullify the effect.Please correct me if im wrong.

[@Michael.design]

So do I understand correctly that if one bills/sends an invoice at the same moment of the delivery of the goods or services it will be a debit of the accounts receivable and there would be no accrued revenue? Or do they exist next to eachother?

[@andreicudisal2731]

I'm currently a 12th grade student learning accounting. Your videos helped me a lot in understanding the complexity of the subject. I've also got pretty high grades so thank you!!

[@AccountingStuff]

Congrats on your high grades! Great to hear it's going well for you :)

[@newenglandsteamworks457]

Why wouldn't the seller just raise the invoice when the transaction is complete, rather than creating a manual journal and invoicing later?

[@user-wi9nn6dz8w]

How is it different from sales in excess of invoicing/billing for point-in-time revenue recognition?

[@MrsEjze]

THANK YOU SO MUCH.. You have no idea how much these videos have helped me. I bought the cheat sheet and I am sure I will use it tons. BEST VIDEOS ON LINE

[@AccountingStuff]

No worries, it's great to know that the videos have helped you out. I hope you find the cheat sheet helpful!

[@sallychen4955]

I have to say your channel is the best one I found during this quarantine !! Thank you very much for helping !!

[@AccountingStuff]

Thanks Sally! I'm happy to help. Hope you're keeping safe!

[@chanmanhei3429]

Wanna know more about closing entry

[@AccountingStuff]

Ok Chan, thanks for letting me know

[@michaelflink8010]

What are the fundamental differences between the ACCOUNTS PAYABLE and ACCRUED REVENUE account?

[@AccountingStuff]

Accrued Revenue is refers to income that has been earned, but not invoiced yet. It is a type of Asset. Once it's been invoiced the Asset moves to Accounts Receivable. Accounts Payable is a Liability.

[@Jendabendaify]

Absolute legend this man. Explaining things in simply in entertaining fashion. Will definitely buy the cheat sheet. My favorite YT channel!

[@AccountingStuff]

Thanks and cheers for your support!

[@srinurafiqah2803]

Do cover irrecoverable debts! Your videos are really helpful for my accounting exams!!

[@AccountingStuff]

Thanks for the suggestion, I'll keep it in mind!

[@shashankshay]

Thank you master for the series. Very helpful.. I just have a small query :- As you mentioned in earlier video that deferred revenue/prepaid revenue/unearned income are one and same thing.. So are there any similar terms for expenses?? Is deferred expense same as Prepaid expenses ?

[@AccountingStuff]

Not so much with expenses... We have Accrued Expenses and Prepaid Expenses

[@Vikermajit]

Tq, Financial Accounting shifu...how about starting a series on Management Accounting, as well?...

[@AccountingStuff]

Thanks for your request!

[@af1132racing]

Just got through this whole mini series, wow, very nice! I can’t help but want to find some middle ground between the cash basis and the accrual basis, but not that modified cash/accrual basis that government entities use. Here is an idea that I cannot get out of my head: IBR basis. The IBR basis (Invoice-Bill-Receipt basis) recognizes revenue when an invoice or sales receipt is generated and recognizes expenses when a bill or purchase receipt is generated. This would eliminate the need for these adjusting entries, and would place the focus back on the accounting triggers themselves. I argue that the focus should be placed on the accounting triggers, especially when focusing on the accruals side of this mini series, and the reason is that for those who have seller/buyer relationships on account, you wouldn’t and shouldn’t expect cash to change hands until after an invoice/bill is created. I’m interested to hear the communities response!

[@birbalkumar5790]

Do we need to post the first entry - debit accrued income credit Income on "reversal basis"? If yes, then it would have been reversed next month and how come the second entry debit account receivable credit accrued income will turn out? Thanks for your help.

[@AccountingStuff]

Adjusting Entries like Accrued Revenue are often posted as reversing journals at the end of every month. This allows for them to be reviewed at month end each time to make sure they are still necessary

[@morgangadson3860]

can you discuss closing journal entries?

[@AccountingStuff]

Hey Morgan, thanks for your suggestion!

[@justus4331]

I am having trouble with these: 1. Sales earned but not billed yet, $3200 2. Additional $400 in sales salaries has been accrued, but not yet recorded 3. Physical count of merchandise inventory on June 30 is $19,840. Please help

[@mmckn1885]

You're $3,200.00 has to be in Accrued Revenue because it has not been billed yet and in Revenue account. The $400.00 have to be recorded into Accrued Revenue and Revenue accounts. I can't give you help Merchandise Inventory without the expense on merchandise, but I can tell you that you need to adjust your account for merchandise based on your merchandise sold expense which is COGS. If you're unsure check out Accounting Stuff videos on merchandise and COGS.

[@jaidev777]

@@mmckn1885 Wait, about the $400, are you sure that is related to accrued revenue and revenue? Not expenses and accrued expenses?

[@carolynespancho4415]

bought it! its been very helpful. Thank you for sharing such knowledge.

[@AccountingStuff]

Awesome, thanks Carolyn! All the best

[@yveschristiandjenzou5492]

Thank you. This video helps me a lot. before I watch it all was mixed up in my head but know it’s all clear and my work is becoming very easy.

[@AccountingStuff]

Great to hear it's making sense :)

[@NoNameLondon]

Man, this is amazing! I need to watch over this again tomorrow. Thanks for recommending that video. I understand everything, although, it needs to sink in. I can't show enough appreciation. Thank man! (I'll check out the PFD too)

[@AccountingStuff]

No problem, sometimes it helps to look at a few scenarios to fully appreciate a concept.

[@zhenzhenjian4881]

Am I right by saying if the invoice is raised then the adjustment entry would be account receivable, if haven’t raised then accrued revenue?

[@AccountingStuff]

If the invoice is raised then it will typically be coded straight to Accounts Receivable and Revenue. If the invoice hasn't been raised then it needs to be coded to Accrued Revenue and Revenue (assuming Accrual Accounting is being followed)

[@Mrgamertoxic]

So the accrued revenue will become the receivables as and when you rise the invoice? Is that the only difference between the receivables and accrued revenue?

[@AccountingStuff]

Yes they will. Accrued Revenue is manually posted in the General Ledger whereas Receivables have a separate subledger with more detail and the journals tend to be automatic

[@teefedtips]

is it accrued revenue because they haven't billed the customer or because they haven't received the payment? or is this the same idea? what i am getting at is, if you have already invoiced the customer, is it still accrued revenue because it hasn't been received yet

[@AccountingStuff]

It's accrued if it hasn't been billed yet. The payment is handled separately

[@maiphuong5168]

Thank you so much. Im struggling a lot with this adjustment through book. Easy to understand now

[@AccountingStuff]

Great to hear it's making sense :)

[@axehealaroha7233]

I just wanna ask Sir could you please drop here the initial entry to the journal and then it's adjusting and final entry to the journal : Thank you very much in advance hoping for your response 🤗🤟🍍✌️

[@pigeonwing9172]

As an example, why is this not suitable to DEBIT accounts Receivable not Accrued Revenu?

[@joekuhlase6532]

Sold 400 backpacks for $120 each. The customer signed a 12-month, 3% Note. How do you adjust his entry?

[@rajmehta4883]

fantastic video. You did a great job making this really simple to understand

[@AccountingStuff]

Thanks, glad you enjoyed it :)

[@spideyfanboy]

where did the account receivables come from?

[@slurpee7530]

Hi. I have a question.Then at the end of this Example after received the cash i need to post 3 journal entries or just 2 ?

[@kirolosmakram881]

yo i know you might not see this but you made me sooooooo happy helped me alot for my exam tomorrow shared it with my friends thay absoloutly loved it

[@reemathakkar223]

Thanks alot from India..I hope i can use the understanding in cpa exams too

[@AccountingStuff]

The basic concepts that I cover in my videos are applicable everywhere

[@GlimmerHandbags]

Wow! You are such an outstanding teacher! Thank you x1000!

[@AccountingStuff]

Happy to help!

[@sameedagha5133]

Love this channel. Waiting for a video on 'Inventory'.

[@AccountingStuff]

Cheers Sameed, and thanks for your suggestion!

[@GG-cq5vj]

How about the "DEPRECIATION"? Is it accrued?

[@AccountingStuff]

Hey there! I cover depreciation in these videos... kzbin.info/aero/PL5zKSeS09l324hTFoBXWq9T3tUY_LUrn2

[@usalem]

Hi,,, you are providing a great material especially for someone like me know nothing about accounting but with your videos i think i know much more, I have bought the adjusting entries cheat sheet, it is great, but I request you please to make more detailed cheat sheets for all 4 types of adjusting entries, for example for the Pre-paid expenses , how it is recorded, and adjusted and readjusted and what accounts are affected in both income statement and balance sheet .... this would be great for us to understand it more and memories it :) Thank you

[@AccountingStuff]

Hey Usama, thanks for your suggestion! I'll look into that

[@HectorGarciaCPA]

brilliant

[@191125]

Just bought your cheat sheet bundle. Please continue showing examples in quickbooks online for the small business owners out here watching your videos. Thanks!

[@AccountingStuff]

Thanks for supporting the channel!! I appreciate it. Cheers for your suggestion

[@aaglobalfx]

i enjoyed this one, the cloud in my mind started to clear on this episode. Thank you!

[@AccountingStuff]

No problem :)

[@VictoriaAngelinaLeighton-Nolly]

Please explain adjusting accrued interest expense and note payable

[@AccountingStuff]

Thanks for your requests :)

[@savinpoojary2756]

hi it's very helpful to understand the topic could please tell me Ur Facebook I'd to communicate.

[@AccountingStuff]

Hey Savin, you can reach me via Instagram or Email

[@savinpoojary2756]

Instagram name

[@stairclimber6027]

At 5:39, why debit accrued revenue and not accounts receivable?

[@AccountingStuff]

We debit accrued revenue because the invoice hasn't been raised yet. You need an invoice in order to add it to accounts receivable because it's a subledger that requires more detail

[@carmenroberts453]

Hey :) is this content and your cheatsheets relevant in Australia?

[@mmckn1885]

If Australia uses GAAP or IFRS then it will be relevant.

[@teeblack6629]

Hello James , your videos have helped me greatly in my studies. Please can you do a video on accrual /prepayment accounting for when you have a bill that’s for 3 months. Say you’ve received a bill for jan, feb, and March , you are billed in March for the three months. How do you account for each month in the books, and adjusting for them. The question papers I’ve used to practice on and tested on, do not specify exactly when the company pays the bill. It gives you when they year ends but that’s it. Say it’s feb, do you account for January’s “ earned” part of the bill in the books or do you account for both jan and febs “earned” portion of the bill? In the final accounts. I’ve been puzzled by these type of questions whether it’s accrued or prepayment adjustments in the final accounts. Please can you help.

[@AccountingStuff]

Thanks for your request!

[@concerned_2023]

Not sure why someone would do a GL entry instead of issuing an invoice if the work completed in a period, but I can see if the work flowed over multiple periods particularly year end where a estimate of earned income should be recorded. Then there is the issue of sales taxes. Record them as revenue is earned or when the invoice is issued? I must admit that I have gotten lazy in monthly adjustments, but by watching your videos it offers a refresher of what we should be doing if rules are to be followed.

[@AccountingStuff]

Hey Rick, sometimes you aren't allowed to bill until you hit a certain milestone. Or the invoice doesn't get approved on time. It happens surprisingly often actually. Sales tax is recorded once the invoice is issued.

[@LightsEnd304]

Thanks for being upfront about charging for the cheat sheets. Always disappointing to follow a link and find some absurd price for a plugged product.

[@AccountingStuff]

No worries :)

[@LaloFP]

Hey james! Quick question: I sell products online. The buyer pays online with his/her credit card and I see that payment in the PaymentPlatform (MercadoPago). MercadoPago releases that money to me 15 days later. This is a typical scenario for this topic? Do I need to wait to the 15 later days to make the invoice?

[@AccountingStuff]

Hey Laureano, thanks for your question. Are you Cash Accounting or Accrual Accounting? If you're Cash Accounting then this video doesn't relate to your situation. Regarding when to invoice, early is always better but it will depend on the terms that you have agreed on.

[@LaloFP]

@@AccountingStuff Thank you for the answer! Im going to implement an accrual open source system (part of an ERP, im a programmer). The thing is that all my sales are online, and I start the orders almost instantly, but are customized, so sometimes the customer receives the item the next day, sometimes the next 20 days. The paymant platform gets the money on the beginning when all starts, but I can finally extract that money 15 days after. So... the only way is to make the 2 entries? I have to remember/automate the second part 15 days after? My programmer spirit doesn't like that haha

[@jamese.jonesjr.1751]

Very informative series. I bought the cheat sheet too. Good work ma'man.

[@AccountingStuff]

Cheers and thanks!

[@jamese.jonesjr.1751]

You're welcome! @@AccountingStuff

[@ilhamlakhouiri1940]

What different between accrued revenue and account payable

[@mmckn1885]

Accrued Revenue is revenue you have earned but not received the money, and have not invoiced the individual for the money. Accounts Receivable is someone owes you money and you have invoiced them on the amount owed.

[@edmerced1522]

Wow excellent work in the explanation. It’s so much easy to get this when you said “hold it temporarily in the BS”

[@AccountingStuff]

Great to hear it's making sense :)

[@Dee-wp5gl]

is it possible to switch your accounting method mid way? Say, we are currently using cash accounting for 2 years and now we want to do accural.

[@AccountingStuff]

Hey Diane, it's possible to switch from Cash to Accrual accounting. But normally you can't go back once you've made the change

[@zahrasyeda558]

Please do Purchase and Sale Returns. Would be a great help

[@AccountingStuff]

Thanks for your request!

[@josephriverajulierichards7897]

Thank you, this was extremely helpful and I appreciate you putting this out

[@hlengiwedakile5861]

Thank you for helping me obtain my degree

[@AccountingStuff]

Congrats on getting your degree! That's all you :)

[@Loveii-rg3tp]

What a relief! Thank you for helping.

[@AccountingStuff]

You're very welcome :)

[@msjadhav5192]

James, could you please also aay whic h document suppose to be in this or that event/transaction. Thank you

[@AccountingStuff]

Cheers for your suggestion!

[@ZeeStreamTube]

don't we need to create journal entry for cash account?

[@AccountingStuff]

Yep, but only when the payment is made

[@hosanna7788]

Are you still single?

[@AndreiQuintana]

this is such a blessing. Thank you so much!

[@tevitatalanoa9880]

I just bought adjusting entries cheat sheet.. Really useful. Thanks bro!! 💯💯 Happy to support ur work!

[@AccountingStuff]

Thanks for your support! I really appreciate it

[@md.modasserhossain8040]

Thanks James for clarifying the issue which was once really confusing for me.

[@AccountingStuff]

No problem, I'm happy to help :)