Accrued income

What it means

Revenue relating to the current period that remains unreceived at the reporting date, added to income and shown as a current asset.

Example

Rent of RM500 earned but not yet received is added to income and shown as owing to the business.

Why it matters

It applies the matching concept so income is recorded in the period it is earned, not when cash arrives.

In practice

Accrued income is income the business has earned during the year but has not yet received. It is added to the relevant income in the income statement. It is shown as a current asset in the statement of financial position, because the money is owed to the firm. This follows the accruals concept, which records income in the period it relates to, not when cash arrives.

A common example is rent receivable. A tenant owes RM400 of rent for the final month, still unpaid at the year end. The RM400 is added to the rent received figure and appears among current assets.

Be careful to tell accrued income from income received in advance, its mirror image. Accrued income is earned but not yet received, and it is an asset. Income received in advance is received but not yet earned, and it is a liability. It also differs from an accrued expense, which is a cost the business owes rather than income due to it.

If you often confuse which adjustments are assets and which are liabilities, one of our teachers can sort a full set of year-end adjustments with you. Book a trial class.

Related terms

• Matching concept
• Income received in advance
• Current asset

Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 4.3 Other payables and other receivables (page 14).

Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.