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Accrued Revenue: Definition and Meaning
Definition
Accrued revenue is revenue a business has earned but has not yet billed to a customer or received in cash.
Why It Matters
Accrued revenue may be needed to ensure that revenue is reported in the period in which it was earned. It can be relevant for service businesses, project-based companies, interest income, and other arrangements in which billing or cash collection occurs after performance.
The treatment of accrued revenue depends on the applicable accounting framework, contract terms, and whether the related performance obligations have been satisfied.
Example
A consulting firm completes work in December but sends the invoice in January. The December amount may be accrued as revenue, depending on the facts and accounting policy.
Related Terms
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