Question

State the meaning of Income received in advance

Answer 1

Income Received in Advance: This refers to the income received whose actual realisation of benefits will occur in the next accounting period.

These are also called unearned incomes.

Example: Commission of ₹ 1,200 for the year 2011 - 2012 is received in 2010 - 2011.

This commission does not belong to the current year as it is related with the work to be done in the next accounting year i.e., 2011 - 2012.