Revenue of Accounting
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Transcript of Revenue of Accounting
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Accounting
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Tehmina Ashfaq
F10ba003Fariha Nasir
F10ba045
Hira farooq
F10ba011
Mariam Bashir
F10ba018
Gohar Shaheen
f10ba016Sidra Taj Din
f10ba012
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The amount business charges
customers for products sold
or services performed
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Example :
Delivery fee
Repairing fee
Service fee
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evenue increase both assets and owners
equity
Assets Liabilities Owner's Equity
Cash Deli.Equip
Accountpayable
OwnersCapital
Revenues description
$ 500 $ 2100 600
+500
1000 2100 600
+ $ 500
$ 500
Deliv.fees
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evenue recorded on the credit side of
owners c pit l ccount.
Owner's Capital
Debit(-)
Credit(+)
Revenues
Debit(-)
Credit(+)
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It arises from the trading
activities of a business
It creates inflow of funds to the
businessIt is measured in terms of money
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It is always related to a particularaccounting period
It is a result of a series revenue
generating activities
Capital is the source of revenue
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Operating revenues are those
that originate from main
business operations.
For example : Sales etc.
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Non-operating revenues are
earned from some side
activity.
For example
: Interest Revenue
Rent Revenue
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These are used to record the
interest earned by the
business.
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Rent revenue is the revenue
from buildings or equipment
of the business on rent.
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Business revenue is income from
activities that are ordinary for a
particular corporation company
partnership or sole-proprietorship.
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For some businesses such as
manufacturing or grocery most
revenue is from the sale of
goods.
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In Accrual Accounting impact ofbusiness transactions are recorded when thetransaction occurs. Revenues are recognized
when earned.
In Cash Accounting transactions arerecorded when cash is received or paid.
Revenues are recorded when cash is received
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Accrued Revenue
Accrued revenues are used for transactions inwhich goods and services have beenprovided, but cash hasn't yet been received.
A common accrued revenue situation isinterest that has been earned but not yetreceived.
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Accrued Revenue
Account Receivable debit
Accrued Revenue credit
When the amount is received, then the entrywill be
Cash debit
Account receivable credit
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The accounts are called
contra revenue accounts that
have exactly opposite
characteristics of revenue
accounts.
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Sale Returns and Allowances
Sale return.
A purchaser may be dissatisfied with themerchandise received because the goods aredamaged or defective, of inferior quality, or donot meet the purchasers specifications
Sale allowance.
A purchaser may choose to keep themerchandise if the seller is willing to grant an
allowance (deduction) from the purchase price
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Sales return debit
and allowances
Cash /Account Receivable credit
Sale Returns and Allowances
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Sale Discounts
A cash discount offered by the seller isknown as Cash discount.
cash debit
Sales discount debit
Account Receivable credit
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Principles of revenue
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In a service enterprise
revenue is considered to be
earned at the time the service
is performed .
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The matching principle is a culmination
of accrual accounting and the revenue
recognition principle. They both
determine the accounting period in
which revenues and expenses are
recognized
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What Is Annual Revenue?
Annual revenue is defined as
the total income generated
from the sale of goods or
services in one financial year
by an organization profit or
non-profit.
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For the closing of revenue accounts
we require an other account called
income summary account
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The income summary
account is a temporary
account used only during the
closing process.
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It contains :
All the company's revenues andexpenses for the current accounting
time period.
It contains net income.The income summary account is
never used when preparing the
financial statementIts only purpose is to be used during
the closing process.
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Owners Equity
Account
IncomeSummary
RevenueAccount
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