Accrued Income Journal Entry

 

Accrued Income Journal Entry

Accrued income represents revenue that has been earned but not yet received, Accrued income another name is Outstanding Income and that will be recorded in the accounting books.

Journal Entry for Accrued Income

Accrued Revenue Account  Debit

Sales or Service Revenue  Credit

• The "Accrued Revenue" account is debited because of recognizing the increase in accrued income. and it is under an Asset Account.
• The corresponding revenue account (e.g., "Sales Revenue" or "Service Revenue") is credited because of recognize the revenue earned.

Let's say a company provides a service to a client in December, but the client will pay in January.

In December Entry 

Accrued Revenue Account  Debit

Sales or Service Revenue  Credit

This entry tells the accrued revenue for the service provided in December. but when the actual cash payment is received in January. a separate entry will be made in January i.e. account for the cash receipt.

In January Entry 

Cash or Bank Account  Debit

Accrued Revenue Account  Credit