Basic Accounting
Earned, billed and collected
The café earns ₹24,000 in March but receives only ₹15,000. What belongs in March revenue?
Practise earned, billed and collected with a worked example and a short check.
Under accrual accounting, revenue follows the work performed. Cash collection settles the claim and can happen later.
Ending receivable = earned revenue − collections on that revenue
March earned ₹24,000 and collected ₹15,000 on that service. The ₹9,000 difference is an asset. Collecting it later swaps receivable for cash.
Record ₹24,000 of March revenue. Collect ₹15,000 and leave ₹9,000 in receivables. April collection of the balance raises cash by ₹9,000 and lowers receivables by the same amount.
March earned ₹24,000 and collected ₹15,000 on that service. The ₹9,000 difference is an asset. Collecting it later swaps receivable for cash.
The café collects the remaining ₹9,000 in April. What is the April revenue from this service?