The following expenses are frequently accrued: Salaries, unless they are paid monthly or more often, rent, taxes, depreciation, books and stationery, and insurance. The control entries for the accrued basis on expenses were given in the previous paragraph. Auxiliary records would, of course, be kept supporting the prepaid expense account showing what it is made up of. Such income as is collected semi-annually or annually should likewise be accrued, especially if it is of considerable amount. For example, a bank regularly sends bills each six months to all corporations for whom coupons are being paid. If the bookkeeping were on a cash basis, the earnings in the month of payment would be unusually large. Assuming that customers are billed in each case for the past six months, the entry upon receipt of the cash would be:

Debit: Cash..............

$1,200

Credit: Commissions ...

$1,200

However, it would be more satisfactory, assuming that past business relations have given reasonable assurance that the service charges would be paid, to make the following entries at the close of each month:

Debit: Due from Customers on account of Coupon Collection Service....

$200

Credit: Commissions ...

$200

On that basis at the end of the six months' period when the service charges are paid, the entries would be:

Debit: Cash..............

$1,200

Credit: Due from Customers on account of Coupon Collection

Service....................

$1,200

In general, it should be said that anticipation of earnings is not conservative bookkeeping. In connection with "earnings" there is another point to be brought out, and that is that when service charges are prepaid, credit should be taken in the earnings and expense statement only as the service is rendered, irrespective of the fact of prepayment. That would be accomplished by the following entries: Assuming that $1,200 has been prepaid for six months' service, the entries covering the payment would be:

Debit: Cash..............

$1,200

Credit: Commissions collected not yet earned..

$1,200

At the end of each month the following entries would show the proportion of profit made during the month:

Debit: Commissions Collected not yet earned........

$200

Credit: Commissions....

$200

The student should remember that the "prepaid" accounts, both those of debit and credit character, should be regarded as assets and liabilities rather than as earnings and expenses. Only such portion of them as is "accrued" would be taken into consideration in the current earning statement.