Also known as outstanding income, accrued income is the income which has been earned during a particular accounting period, however, the related funds have not been received until the end of that accounting period. So, it grows by addition and remains due to be received in the forthcoming accounting periods.
Examples include accrued interest on investment, accrued rent to be collected, commission earned but not received, etc. Accrued income is recorded in the books at the end of an accounting period to show true numbers of a business.
Understand the word accrued as accumulation and addition of something.
Out of the three types of accounts in accounting, accrued income is a personal account and is shown on the asset side of a balance sheet.
Journal Entry for Accrued Income (or) Outstanding Income
|Accrued Income A/C||Debit|
|To Income A/C||Credit|
Let’s assume that in March there was an amount of 30,000 due to be received as interest on investment which isn’t received due to some reason. To record this in the financial statements for the period ending on March 31, the following journal entry is posted;
|Accrued Interest A/C||30,000|
|To Interest A/C||30,000|
Short Quiz for Self-Evaluation
Some error has occured.
For Accounting Practice