How to record Accrued Income in V13

ERPNext User Forum
1

Hi all, I see that ERPNext V13 comes with the Deferred Income and Deferred Expenses processing which are very good. But there is no specific process for Accrued Income. How should we process the booking of Accrued Income in ERPnext? The difference between Deferred Income and Accrued Income:

  • Deferred Income is the Liability Account. We issue invoice to customer before recognize the revenue (we bill in advance).
  • Accrued Income is the Asset Account. We recognize revenue in our our book, but we have not issue the billed to customer yet.
2

Does this answer your question?

https://docs.erpnext.com/docs/user/manual/en/accounts/deferred-revenue

3

@kennethsequeira the linked you put is only apply to deferred revenue. It is different from Accrued Income as I explained.

  • Deferred Income is the Liability Account. We issue invoice to customer before recognize the revenue (we bill in advance). Currently the system is good with it.

  • Accrued Income is the Asset Account. We recognize revenue in our our book, but we have not issue the billed to customer yet. Currently the system does not have a function to apply this one.

4

Is this like the end-of-period subscription invoicing?
Where you deliver the product/service first and invoice later at end period.

Isn’t this working for you?:
Book the Revenue (cr) against AR (dr). And later adjust the AR to cash/bank when payment is received.
Maybe to separate, make a new account and name it Accrued Income under Assets.

5

What doctype are you suggesting to use when recording Accrued Income? If we are to use Sale Invoice buy recording Revenue and Accrued Income, then account type for Accrued Income must be “Receivable”. in that case the balance of Accrued Income will be shown in Account Receivable Reports, which is incorrect.
Another step is to collect payment we shall issue invoice to collect payment. In that case we shall issue invoice with Revenue and Account Receivable. Then amount in Account Receivable will be double.

6

When the revenue is earned (booked):

                             Dr     |     Cr
                            ------------------
Acct. Receivable             150    |
   Accrued Income                   |     150

When the money is received:

                             Dr     |     Cr
                            ------------------
Cash or Bank                 150    |
   Acct. Receivable                 |     150

So in CoA, the Accrued Income account is still Income account.

7

This is wrong. Accrued income is Income.

For example, A Company has earned Interest Income of $1000 from its deposit with a Bank. It closes its books at the year-end, December 31. But the Bank will make the income appear on January 5.

On December 31 the entry will be:
Debit - Interest Income Receivable (Asset) $1,000
Credit - Interest on Bank Deposit (Income) $1,000
– This allows the Company to recognize income within the correct period.

On January 5, the entry will be:
Debit - Bank Account (Asset) $ 1,000
Credit - Interest Income Receivable $ 1,000
– This allows the Company to record the amount reflected on the bank book on January 5.

So, Accrued Income is income not asset.

8

You may split your accounts receivable as:
Accounts Receivable Not Billed / and Accounts Receivable.

So, when you recognize revenue in your book, you can have
Accounts Receivable Not Billed Debit
Revenue Credit

When you bill the customer, you have
Accounts Receivable Debit
Accounts Receivable Not Billed Credit.

As you see, Accrued Income is still income.
The difference is split between those receivables that have bills printed, and those receivables that have not yet printed billing statements (smile).

9

In ERPNext, the income will be booked upon the sales invoice creation only. In your case, I think you want the income to be booked before the invoice creation, but it should not effect the account receivable. It should hit the customer account only when you create the sales invoice. I believe accrual accounting is not available currently in ERPNext. If you are doing manually, you have to pass a journal entry first to book the accrued income and then create a sales invoice later for the customer.

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