10 Accrued Revenue Accounting Entries For Errorfree Books

Accrued revenue, also known as accrued income, is the amount of revenue that is earned by a business but not yet invoiced or received. Accurate accounting for accrued revenue is essential for financial reporting and tax purposes. Here are 10 examples of accrued revenue accounting entries that can help ensure error-free books:

1. Accrued Revenue from Sales: Suppose a company sells goods worth $10,000 to a customer on credit, but the invoice is not sent until the next accounting period. The accounting entry would be:

   • Debit: Accounts Receivable ($10,000)
   • Credit: Sales Revenue ($10,000)
   • Debit: Accrued Revenue ($10,000)
   • Credit: Accounts Receivable ($10,000)

2. Accrued Interest Income: A company has a savings account with a balance of 100,000, earning an annual interest rate of 5%. The interest for the quarter is 1,250, but it is not yet received. The accounting entry would be:

   • Debit: Cash ($1,250)
   • Credit: Interest Income ($1,250)
   • Debit: Accrued Interest Income ($1,250)
   • Credit: Cash ($1,250)

3. Accrued Rent Revenue: A landlord has a tenant who pays rent quarterly, but the rent for the current quarter is not yet received. The accounting entry would be:

   • Debit: Rent Receivable ($5,000)
   • Credit: Rent Revenue ($5,000)
   • Debit: Accrued Rent Revenue ($5,000)
   • Credit: Rent Receivable ($5,000)

4. Accrued Commission Income: A salesperson earns a commission of 10% on sales, and the total sales for the month are 50,000. The commission is 5,000, but it is not yet received. The accounting entry would be:

   • Debit: Commission Receivable ($5,000)
   • Credit: Commission Income ($5,000)
   • Debit: Accrued Commission Income ($5,000)
   • Credit: Commission Receivable ($5,000)

5. Accrued Dividend Income: An investor owns shares in a company that pays dividends quarterly, but the dividend for the current quarter is not yet received. The accounting entry would be:

   • Debit: Dividend Receivable ($2,000)
   • Credit: Dividend Income ($2,000)
   • Debit: Accrued Dividend Income ($2,000)
   • Credit: Dividend Receivable ($2,000)

6. Accrued Royalty Income: An author earns royalties on book sales, and the total sales for the quarter are 20,000. The royalty rate is 10%, and the royalty income is 2,000, but it is not yet received. The accounting entry would be:

   • Debit: Royalty Receivable ($2,000)
   • Credit: Royalty Income ($2,000)
   • Debit: Accrued Royalty Income ($2,000)
   • Credit: Royalty Receivable ($2,000)

7. Accrued Service Revenue: A company provides services to clients, and the total service revenue for the month is $30,000. The accounting entry would be:

   • Debit: Service Receivable ($30,000)
   • Credit: Service Revenue ($30,000)
   • Debit: Accrued Service Revenue ($30,000)
   • Credit: Service Receivable ($30,000)

8. Accrued Subscription Revenue: A company offers subscription-based services, and the total subscription revenue for the quarter is $15,000. The accounting entry would be:

   • Debit: Subscription Receivable ($15,000)
   • Credit: Subscription Revenue ($15,000)
   • Debit: Accrued Subscription Revenue ($15,000)
   • Credit: Subscription Receivable ($15,000)

9. Accrued Licensing Revenue: A company licenses its intellectual property to other companies, and the total licensing revenue for the year is $50,000. The accounting entry would be:

   • Debit: Licensing Receivable ($50,000)
   • Credit: Licensing Revenue ($50,000)
   • Debit: Accrued Licensing Revenue ($50,000)
   • Credit: Licensing Receivable ($50,000)

10. Accrued Milestone Revenue: A company earns revenue based on milestones achieved, and the total milestone revenue for the project is $200,000. The accounting entry would be:

    • Debit: Milestone Receivable ($200,000)
    • Credit: Milestone Revenue ($200,000)
    • Debit: Accrued Milestone Revenue ($200,000)
    • Credit: Milestone Receivable ($200,000)

These examples illustrate the importance of accurate accounting for accrued revenue. By recognizing revenue when it is earned, rather than when it is received, companies can ensure that their financial statements accurately reflect their financial position and performance.

By following these guidelines and examples, companies can ensure that their accounting for accrued revenue is accurate and complete, which is essential for maintaining error-free books and making informed business decisions.