Accrued Income
What is Accrued Income?
Accrued income is income the business has earned but is yet to receive, as at period-end.
![ai1](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai1.jpg)
How it Works
The business may have done work for clients during the period.
![ai2](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai2.jpg)
Income from this work should be shown in the period-end reports.
![ai3](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai3.jpg)
But as at period–end, the business may not yet have invoiced their clients for some of the work done.
![ai4](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai4.jpg)
For the period-end report to be correct, you need to add the unreported income.
![ai5](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai5.jpg)
When doing this, you will use an accrued income account.
![ai6](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai6.jpg)
How to Account for Accrued Income
To record accrued income, you begin by estimating it.
![ai7](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai7-1.jpg)
Then you record this estimate in an accrued income account.
![ai8](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai8.jpg)
The accrued income account is an asset account.
![ai9](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai9.jpg)
In this case, the asset account shows money owed to the business.
![ai10](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai10.jpg)
To record the accrual, you credit the income account.
![ai11](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai11.jpg)
This shows the value will come from fee income
![ai12](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai12.jpg)
Then you debit the accrued income account.
![aiu13](https://seeaccountingnow.online/wp-content/uploads/2021/07/aiu13.jpg)
This shows the value owed has been recorded in the accrued income account.
![ai14](https://seeaccountingnow.online/wp-content/uploads/2021/07/ai14.jpg)