Income received in advance :
Income is received in advance during the current year. It is received for the next year, it should not be included in the current year's income.As this income pertains to the next year. It cannot be treated as income in the current year, so it becames a liability representing a person who may be a creditor for this .it should be credited.
Example : if rent is received in advance for the period Jan and Feb 2013, in December 2012, rs 9000.then the entry will be.
Rent a/c. 9000
To rent received in advance a/c. 9000
( rent received in advance for Jan and Feb in the month of Dec 2012.)
Income is received in advance during the current year. It is received for the next year, it should not be included in the current year's income.As this income pertains to the next year. It cannot be treated as income in the current year, so it becames a liability representing a person who may be a creditor for this .it should be credited.
Example : if rent is received in advance for the period Jan and Feb 2013, in December 2012, rs 9000.then the entry will be.
Rent a/c. 9000
To rent received in advance a/c. 9000
( rent received in advance for Jan and Feb in the month of Dec 2012.)
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