Unearned Revenue is a payment received before goods or services are delivered. Usually, project or contract based businesses will classify their revenue into earned (sales income) and unearned as goods and services are delivered at a later date.
To record the unearned revenue in MoneyWorks accounting software, first you create a new Current Liability account, Unearned Revenue. Then, use a Sales Invoice transaction to record the unearned revenue with a relevant GST code.
“If the advance payment received forms part payment of the supply, GST is chargeable.” — source: IRAS website, www.IRAS.gov.sg
The double entry for this transaction will be:
Debit Accounts Receivable account
Credit Unearned Revenue account
Credit GST Payable account
A General Journal need to be passed when realising the revenue. The double entry for the journal transaction will be:
Debit Unearned Revenue account
Credit Sales Income account (earned revenue)
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