It is recorded as a debit to royalty expenditure and a credit to accumulated royalties in the ledger (assuming the royalties are to be paid at the end of the period). For example, an author may get paid $1 every book sold for the first 10,000 copies, then $1.50 each book sold after that. The publisher records 10,000 as the royalty payment for the year and also credits the author with $10,000 of new revenue. The royalty expense should be equal to or greater than the royalty income. If it is not, then something has been misstated. Either there was actually less royalty income than reported or more royalty expenses were incurred than reported. For example, if an author's royalty income is $10,000 and his royalty expense is only $5,000, then there is a difference of $5,000 between the two lines on the statement of financial position. This means that the agent who prepared the statement of financial position assumed that the author would spend $5,000 when in fact he or she did not. In this case, the author's share of the company profits must be adjusted down by $5,000 so that his or her net profit is $3,000 rather than $4,000. This example shows how important it is to check the accuracy of your statements against external sources of information, such as accounts sent to you by agents or publishers.