What is Income Received in Advance?

Income Received in Advance

If an income that belongs to a future accounting period is received in the current accounting period it is considered as Income Received in Advance, also known as Unearned Income. This type of income is received before the related benefits are provided.

Income received in advance is a personal account and shown on the liability side of the balance sheet.

 

Journal Entry for Income Received in Advance

 Income A/C  Debit
   To Income Received in Advance A/C  Credit

 

 

Example

In March 10,000 were received in advance for rent which belonged to the month of April. The journal entry to record this in the current accounting period (31st March) will be as follows:

 Rent Received A/C  10,000
   To Rent Received in Advance A/C  10,000

 

>Read Accrued Income