Accounting rules for Income accounts (Revenue accounts)

Transactions that increase revenue are recorded on the credit side of the Income accounts and transactions decreasing revenue are accounted on the debit side of the Income accounts.

A company can generate income by selling its goods and services, or receive interest and dividend income from the funds previously invested.

The accounting principle of an entry recording for income accounts is the following:

In the Income accounts: credit entries increase the balance and debit entries decrease it.

Income accounts are credit balance accounts.

In order to track the sales is used a sales revenue account, i.e., a Sales account. It contains the records of all sales transactions. The increase in sales revenue is recorded on the credit side of the Sales account when the income is generated, whereas the counter-entry is recorded on the debit side of the Cash or other Financial assets account as an increase in financial assets.

If the customer returns the goods have been purchased, the seller sends to the customer the credit note (in Finnish, hyvityslasku) and makes a record as a decrease of income on the debit side of the Sales account and as a decrease of financial assets on the credit side of the Financial assets account.

The sales revenue and income decrease are recorded in the Sales account according to the model below:

This accounting principle is also followed in the recording of other income that does not come from a company's main business. Rental income is recorded on the credit side of the rental income account, dividends received are recorded on the dividend income account, interest received on the interest income account etc.