Definition

Accrued revenues

Revenues earned but not yet recorded at the statement date are accrued revenues. Accrued revenues may accumulate (accrue) with passing of time, as in the case of interest revenue and rent revenue. Or they may result from services that have been performed but are neither billed nor collected. The former are unrecorded because the earning process (e.g., of interest and rent) does not involve daily transactions. The latter may be unrecorded because the company has provided only a portion of the total service.

An adjusting entry for accrued revenues serves two purposes: (1) It shows the receivable that exists at the balance sheet date, and (2) it records the revenues earned during the period. Prior to adjustment, both assets and revenues are under stated.

An adjusting entry for accrued revenues increases (debits) an assets account and increases (redits) a revenue account.

Share it:  Cite

More from this Section