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    ncsmitty's Avatar
    ncsmitty Posts: 1, Reputation: 1
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    #1

    Apr 23, 2007, 02:10 PM
    Accounting 101: A/R and Income accounts
    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.
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    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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