CirTran Corporation (CIRX)

[Sparklefarkle]

You are confused.

Accrual accounting vs Cash Accounting. Cirtran uses Accrual Accounting.

In this case there is no need to accru for royalties because of law suit. If they did they would have an offsetting entry to the income statement as an Expense and reflected in Net Income which is shown on the balance sheet as retained earnings to keep the books in balance.

If united licensing group owed royalties it would show as royalty income on the income statement and as an accounts receivable on the balance sheet. Flows through as et income and retained earnings to balance sheet. No need due to law suit.

ASSETS = LIABILITIES + OWNERS EQUITY ( RETAINED EARNINGS)