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Accounting 101: A/R and Income accounts

Asked Apr 23, 2007, 02:10 PM — 1 Answer
Hi -- a very basic question about the accounts behind the scene in QuickBooks. When I receive a payment from a customer (we are a contracting business) and A/R gets credited (correct?) what account gets the debit? Is it Construction Income? If so, what is the balance sheet account that Income accounts map to? It's good that QB does stuff for me but I like to understand what would happen if I was doing it the "old fashioned" way.

Thanks.

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CaptainForest Posts: 3,684, Reputation: 2085
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Apr 23, 2007, 10:16 PM
I take it you are a company that does the work, then bills the client.

So at the time you bill the client, the JE would be:

Dr. Accounts Receivable
Cr. Revenue (or Construction Income)

You are crediting the revenue at this time because you have already done the work and the only thing left is to collect the money, therefore it is pretty much earned.


When the client sends you the money, they are sending you cash.

Therefore, the JE is:

Dr. Cash
Cr. Accounts Receivable
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