Accrued Revenue

Accrued Revenue refers to income that has been earned by a company for providing goods or services, but has not yet been received or recorded in the financial statements. This Revenue is recognized in the accounting period when it is earned, regardless of when the cash is actually received. It is an essential concept in accrual accounting, ensuring that Revenues are matched with the expenses incurred to generate them.

Examples:

• A consulting firm completes a project in December but does not bill the cLient until January. The Revenue for the project is accrued in December.
• A software company delivers a software license in March, but the payment is due in April. The company records the Revenue in March.

Cases:

• A company provides a service in December, but the payment is not received until February of the following year. The company recognizes the Revenue in December’s financial records.
• A construction company finishes a project in November but submits the invoice in December. The Revenue is accrued in November to reflect when the service was performed.