Income received in advance

Question 1

What is it?

Answer 1

Payment received in advance of the accounting period to which it relates

Question 2

What is the double entry for income received in advance?

Answer 2

Debit the source of income on the income statement

Credit ‘income received in advance’ (current liability)

Question 3

Does prepaid income decrease or increase the item on the income statement?

Answer 3

Decreases