Accrued Income

Accrued income refers to earnings that have been recognized in a company’s financial statements but have not yet been received in cash. This occurs when a company delivers goods or services and recognizes the revenue, even though the payment will be received at a later date. Accrued income is typically recorded as an asset on the balance sheet, as it represents money that is owed to the company and will be received in the future. This concept is a key part of accrual accounting, ensuring that revenue is matched with the period in which it is earned, rather than when the payment is received.

Example

If a company completes a project in December but will not be paid until January, it would record the income as accrued income in December.