What is accrued revenue?
Accrued revenue is revenue that has been earned through the sale of goods or services, but for which cash payment has not yet been received. It is a product of accrual accounting and the revenue recognition principle, which requires the recording of revenue transactions in the same accounting period in which they are earned, rather than the period in which payment is received.
Certain types of businesses may be more likely to book accrued revenue than others, particularly companies who complete long-term projects and receive payment upon completion of the project. For example, electricity usage is provided to customers by utility companies in one period, then paid by the customers in another period. SaaS companies also frequently encounter accrued revenue.
Accrued revenue, unearned/deferred revenue, and accrued expenses
Unlike accrued revenue, realized revenue and recognized revenue both refer to revenue in which payment has been received. Unearned revenue and deferred revenue, meanwhile, refer to revenue for which payment has been received, but the goods or services have yet to be delivered. An accrued expense is an expense which has been incurred or recognized but not yet been paid.