Question

Commission Received from Haryana Automobiles Rs. 8,000

27 Aug 2021
Answer :
Word Count : 573

Commission received is an income for a business, typically recorded under the "Other Income" section in the financial statements. In financial accounting, the accounting treatment for commission income involves recognizing it in the books when earned, irrespective of whether cash is received immediately or later. The accounting for commission received from Haryana Automobiles, amounting to Rs. 8,000, would follow the principle of accrual accounting, where income is recognized when it is earned.

The commission is typically associated with a sale or a service rendered, and it reflects the earnings from business activities not directly related to the core operations of the company. Therefore, commission income is classified as non-operating income unless the company is primarily engaged in commission-based activities.

Journal Entry for Commission Received:

When the commission of Rs. 8,000 is received from Haryana Automobiles, the journal entry would be as follows:

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