Accrued revenue

Accrued revenue refers to revenue that a company has earned but has not yet received in cash. It represents revenue that has been recognised on the books, but for which payment has not yet been received. This is an important concept in accrual accounting, where revenue is recognised when it is earned, not necessarily when it is received in cash.

A company records accrued revenue through an adjusting journal entry. It involves debiting (increasing) an accrued revenue asset account and crediting (increasing) a revenue account.

Accrued revenue is important for accurate financial reporting. It ensures that financial statements reflect all revenue earned in a given period, even if cash hasn’t been received yet.

Accrued revenue is crucial for accurately representing a company’s financial performance. It helps ensure that financial statements reflect the revenue the company has earned, even if the payment hasn’t been collected yet.