Journal Entries For Unbilled Revenue & Journal Entries of Unrealized Earning

When we sell the goods to the buyer of goods, we are able to show our revenue in our books as per the accrual concept of accounting. Whether we have obtained the cash from sale or not, we show total sale revenue in our income statement. Unbilled revenue case is different from outstanding revenue. It is that 
revenue which we have earned but we still did not write the bill or invoice for getting the revenue. For example, we are service company. We have completed the project. When we have completed the project, we issue the bill end of the 3rd day  after providing the service. But we did not issue the bill at end of third day but we have issued the bill at the end of 10th day after providing the service. So, revenue between the end of 3rd day and end of 10th day will be our unbilled revenue.

We have to pass the following entry of its record. 

1. For Recording of Revenue 

Unbilled Account Receivable Account Debit
  
       Revenue Account Credit

We have debited the unbilled account receivable account because these are the part of our asset but still unbilled. By showing it as Unbilled in FS, it will be helpful for auditor to know their detail.

We have credited the revenue account because whether we have obtained cash or not from sale, it is our earning and every earning will be credited in the journal entry.

2. When bill has been issued to the party.

Account Receivable Account Debit

Unbilled Account Receivable Account Credit

Benefit of Passing Unbilled Revenue Journal Entry

You may think, what is the benefit of passing Unbilled revenue when we correct this transaction by transferring it to account receivable account. On this, I want to say that big company appoints billing auditor (Internal auditor) for checking the procedure of billing department. If they find above first entries of different debtors, they can get help for further investigation. Any mistake or error in the billing time may be correct fastly before affecting any budget or our financial plan.

Journal Entries of Unrealized Earning

Unrealized earning means that earning which we can find by knowing the increase in the market value of our asset. It is also called unrealized gain or revenue. If we see that today our share rate is Rs. 500 but we have bought it one day ago at the rate of Rs. 400. So, today our unrealized earning will be Rs. 100. Like this, we 
see our other assets value increase. So, showing our balance sheet under marked to market, we have to pass the journal entry of unrealized earning. Unrealized earning is different from outstanding earning. In unrealized earning or gain, we just get paper information that our asset's value has increased. So, we have this gain but in the outstanding earning, we sell our asset but we did not received money in cash. Following journal entry will be pass in the case of unrealized earning.

Asset account Debit

Unrealized Earning account Credit

Now ,  discuss why did we debit the asset account and why did, we credit the unrealized earning.

We have debited asset account because value of asset has increased. Every increase in the value of asset is debited. If value of share has increased with Rs. 100. We will debit our share investment account with Rs. 100. We credited the unrealized earning account because we have to credited all the earning.



Important :


As per historical cost concept, we will not write above entry because we keep all the assets on their historical cost rather than their market value but now latest GAAP requirement, financial instruments like shares and stock will be kept in the financial statement at their market value rather than their historical cost. So, above entry is important for showing the correct net income in   the income statement and financial position in the balance sheet.