First of all, excuse my lack of knowledge in accounting.. I am still learning! I am struggling to know how should I record money that goes into company's bank account temporarily which should be paid out to a third party. A perfect example is Uber, for example, when I as a rider request a ride and the fare is $20, once the trip completes the $20 are deducted from my credit card and goes into Uber's bank account. A week later or so Uber will pay the driver for example $18 and keeps $2 as a revenue.
How should Uber create this journal entry? should it be like this:
Also, what is the accounting term that should be used for the $18 ? For example, for the $20, Uber issues an invoice to the customer. What does Uber issue to the driver, or vice versa!, for the $18?
Thanks!
How should Uber create this journal entry? should it be like this:
| Cash | 20 | ||
| Accounts Payable | 18 | ||
| Revenue | 2 |
Also, what is the accounting term that should be used for the $18 ? For example, for the $20, Uber issues an invoice to the customer. What does Uber issue to the driver, or vice versa!, for the $18?
Thanks!
