what is accrued revenue 
accrued revenue is revenue that has been earned by providing a good or service but for which no cash has been received accrued revenues are recorded as receivables on the balance sheet to reflect the amount of money that customers owe the business for the goods or services they purchased accrued revenue may be contrasted with realized or recognized revenue and compared with accrued expenses investopedia zoe hansenunderstanding accrued revenueaccrued revenue is the product of accrual accounting and the revenue recognition and matching principles the revenue recognition principle requires that revenue transactions be recorded in the same accounting period in which they are earned rather than when the cash payment for the product or service is received the matching principle is an accounting concept that seeks to tie revenue generated in an accounting period to the expenses incurred to generate that revenue under generally accepted accounting principles gaap accrued revenue is recognized when the performing party satisfies a performance obligation for example revenue is recognized when a sales transaction is made and the customer takes possession of a good regardless of whether the customer paid cash or credit at that time accrued revenue often appears in the financial statements of businesses in the service industry because revenue recognition would otherwise be delayed until the work or service was finished which might last several months in contrast to manufacturing where invoices are issued as soon as products are shipped without using accrued revenue revenues and profit would be reported in a lumpy fashion giving a murky and not useful impression of the business s true value for example a construction company will work on one project for many months it needs to recognize a portion of the revenue for the contract in each month as services are rendered rather than waiting until the end of the contract to recognize the full revenue in 2014 the financial accounting standards board and the international accounting standards board introduced a joint accounting standards code topic 606 revenue from contracts with customers 1 this was to provide an industry neutral revenue recognition model to increase financial statement comparability across companies and industries public companies had to apply the new revenue recognition rules for annual reporting periods beginning after december 15 2017 2recording accrued revenueaccrued revenue is recorded in the financial statements by way of an adjusting journal entry the accountant debits an asset account for accrued revenue which is reversed with the amount of revenue collected crediting accrued revenue accrued revenue covers items that would not otherwise appear in the general ledger at the end of the period when one company records accrued revenues the other company will record the transaction as an accrued expense which is a liability on the balance sheet 