Revenue earned before billing or cash receipt, usually recorded as an asset until invoiced or collected.
Accrued revenue is revenue that has already been earned even though the customer has not yet been billed or has not yet paid. Under accrual accounting, the revenue belongs in the current period, so the business records it before cash arrives.
Accrued revenue is one of the clearest examples of the gap between earning revenue and collecting cash. If it is omitted, both revenue and assets can be understated.
This situation often appears when services are delivered before invoicing, when billing happens periodically in arrears, or when interest income has been earned but not yet received. The business records an asset for the amount it has earned and recognizes the related revenue in the same period.
When the invoice is later issued or cash is received, the accrued balance is cleared into accounts receivable or cash.
A consulting firm completes 8,000 of work in March but will not invoice until April:
| Account | Debit | Credit |
|---|---|---|
| Accrued Revenue | 8,000 | |
| Revenue | 8,000 |
That entry puts the earned amount into March even though billing happens later.
Accrued revenue is not the same as accounts receivable in every system. It often becomes accounts receivable later, but it starts as revenue earned before the invoice is issued.