MGMT 1A Chapter Notes - Chapter 3.3: Deferral, Accrual, Income Statement
Document Summary
Prior to an accrual adjustment the revenue account (and the related asset account) or the expense account (and the related liability account) are understated. Thus, the adjusting entry for accruals will c . Accrued revenues : revenues for services performed, but not yet recorded at the statement. May accumulate (accrue) with the passing of time, as in the case of interest revenue. These are unrecorded, because the earning of interest does not involve daily transactions. Accrued revenues may also result from services that have been performed, but not yet billed impractical to do so or collected (as in the case of commissions and fees) These may be unrecorded, because only a portion of the total service has been performed and the clients will not be billed until the service has been completed. Adjusting entry records the receivable that exists at the balance sheet data and the revenue for the services performed during the period.
