Question

What do you mean by accrued Income? (Answer in one sentence)

Answer 1

Accrued income is income which has been earned but not yet received. Income must be recorded in the accounting period in which it is earned. Therefore, accrued income must be recognized in the accounting period in which it arises rather than in the subsequent period in which it will be received.

Answer 2

An accrued income is the income that has been earned but not yet received.

• Income must be recorded in the time it is collected in the accounting period. It is therefore important to consider deferred profit in the accounting period in which it occurs rather than in the following period in which it is to be earned.
• The interest a company earns on a bond purchase is an example of accumulated profits. The accrued interest income is registered on December 31 with an accrual adjustment entry.