what is accrued income 
accrued income is the money a company has earned in the ordinary course of business but has yet to be received and for which the invoice is yet to be billed to the customer mutual funds or other pooled assets that accumulate income over a period of time but only pay shareholders once a year are by definition accruing their income individual companies can also generate income without actually receiving it which is the basis of the accrual accounting system understanding accrued incomemost companies use accrual accounting it is an alternative to the cash accounting method and is necessary for companies that sell products or provide services to customers on credit under the u s generally accepted accounting principles gaap accrual accounting is based on the revenue recognition principle this principle seeks to match revenues to the period in which they were earned rather than the period in which cash is received in other words just because money has not yet been received it does not mean that revenue has not been earned the matching principle also requires that revenue be recognized in the same period as the expenses that were incurred in earning that revenue also referred to as accrued revenue accrued income is often used in the service industry or in cases in which customers are charged an hourly rate for work that has been completed but will be billed in a future accounting period accrued income is listed in the asset section of the balance sheet because it represents a future benefit to the company in the form of a future cash payout revenue recognitionin 2014 the financial accounting standards board which establishes regulations for u s businesses and non profits introduced accounting standards code topic 606 revenue from contracts with customers to provide an industry neutral revenue recognition model to increase financial statement comparability across companies and industries 1the fasb also issued the following amendments to asu no 2014 09 to provide clarification on the guidance asu no 2015 14 revenue from contracts with customers topic 606 deferral of the effective date asu no 2016 08 revenue from contracts with customers topic 606 principal versus agent considerations reporting revenue gross versus net asu no 2016 10 revenue from contracts with customers topic 606 identifying performance obligations and licensing asu no 2016 12 revenue from contracts with customers topic 606 narrow scope improvements and practical expedients2examples of accrued incomeassume company a picks up trash for local communities and bills its customers 300 at the end of every six month cycle even though company a does not receive payment for six months the company still records a 50 debit to accrued income and a 50 credit to revenue each month the bill has not been sent out but the work has been performed and therefore expenses have already been incurred and revenue earned 