Are Fees Earned An Asset

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Pregnant of Fees Earned

Fees earned signify the revenue an entity that is generally engaged in rendering services to its clients generates during the reporting period. When an entity deals in both goods and services information technology charges fees for the role of services rendered and for the goods delivered it charges the predetermined cost. It mostly forms a major office of revenue in the service industry.

Few Instances wherein an entity record the amount earned as fees:

For Services Rendered

Consultancy
Consultancy on Taxation Related Matters
Auditing and Balls
Architectural Services
Accountancy and Other Legal Services.

Both Goods and Services

Manufacturing and repairs
Trading in appurtenances and consultancy
Goods and transport

When a combined amount is received for the cases wherein both appurtenances and services are rendered one has to record fees earned proportionately.

Whether information technology shall be Credited or Debited?

Fees Earned shall exist credited every bit fees form a part of the revenue and as per modernistic rule of accounting, the increase in an income should be "Credited".

Even if you follow the gold rule of accounting there will be no change in the answer this is because equally per the golden rule about a nominal account debit the expenses and losses and credit all incomes and gains.

Accounting treatment

If an entity follows the Cash System of Accounting entire amount received shall form part of the fees earned. One demand not distinguish fees based on actual earnings in the accounting period.

Journal Entry for the same shall be:

Bank A/c	Debit	Debit the increase in an asset.
To Fees Earned A/c	Credit	Credit the increase in income.

The bookkeeping treatment in an income statement is given below;

Fees received in income statement

If an entity follows the Accrual Organisation of Accounting only that part of the receipts shall class a role of fees earned which has been accrued in the reporting period.

The amount if received in advance shall be recorded as a liability and if received less then such a divergence shall be recorded as sundry debtors under current assets.

Journal Entry for the same shall be;

Out of the total revenue, a function of fees is received in accelerate-

Banking company A/c	Debit	Debit the increase in an asset.
To Advance Fees A/c	Credit	Credit the increase in liability.
To Fees Earned A/c	Credit	Credit the increase in income.

It appears in the income statement and balance canvas as;

Advance Fees received in balance sheet

Fees Earned in Income Statement

In case if merely part of fees earned is received in a reporting period:

Bank A/c	Debit	Debit the increase in an asset.
Sundry Debtors A/c	Debit	Debit the increment in an nugget.
To Fees Earned A/c	Credit	Credit the increment in income.