What is 'accrued revenue'?

Accrued revenue refers to revenue that has been earned for services rendered or goods delivered but has not yet been received in cash. This concept is a key principle in accrual accounting, where financial events are recorded when they occur, regardless of when cash transactions take place. Businesses recognize accrued revenue to reflect their revenue-generating activities accurately in their financial statements, even if the actual cash inflow hasn't happened yet.

For instance, a company might provide services to a client in December and invoice them, but the payment might not be received until January. In this case, the revenue for December is accrued, allowing the company to show its financial performance for that period accurately. This principle is important for providing a realistic view of the company's financial health and ensuring compliance with accounting standards.