According to the accrual basis of accounting, if I earn 1000$ in December in receive them in January, I will make an entry in accounts receivable(Debit) and in sales(Credit) for December, and in January it will be recorded as a reduction of accounts receivable. This last part (recorded as reduction of accounts receivable in January) is what I do not understand.


Thanks & Regards,

If you are using an accounts receivable system you will invoice the debtor at the close of December crediting Sales and the balance will remain in accounts receivable (debtors) until paid. If however you don't invoice until January then an adjustment is necessary in December which will be reversed in January because if it isn't reversed you will account for the transaction twice