Accrued Revenue Examples & Journal Entries

In accrual accounting, accrued revenue refers to income earned but not yet invoiced or received. This happens when a company delivers goods or services but hasn’t billed the customer yet.

Let’s explore this concept with real-life examples and their respective journal entries.

What is Accrued Revenue?

Accrued revenue is:

• Earned: The goods/services have been delivered.
• Not yet billed: No invoice issued.
• Not yet received: No cash collected.

Accrued revenue increases assets (accrued revenue or accrued interest income) and revenue in the income statement.

Examples and Journal Entries

1. Product Sales Accrued Revenue

Scenario:
On August 31, a company ships $25,500 worth of goods. The customer was billed on September 1. At August-end, the accountant must accrue the revenue.

Journal Entry on August 31 (Accrual):

Date	Account Title	Debit ($)	Credit ($)
Aug 31	Accrued Revenue A/c Dr	25,500
	To Sales Revenue		25,500
To record accrued sales revenue before billing.

Reversing Entry on September 1 (Before Billing):

Date	Account Title	Debit ($)	Credit ($)
Sep 1	Sales Revenue A/c Dr	25,500
	To Accrued Revenue		25,500
To reverse accrual upon billing.

Standard Invoice Entry:

Date	Account Title	Debit ($)	Credit ($)
Sep 1	Accounts Receivable A/c Dr	25,500
	To Sales Revenue		25,500
To record invoice sent to customer.

Payment Collection Entry:

Date	Account Title	Debit ($)	Credit ($)
Sep 15	Cash A/c Dr	25,500
	To Accounts Receivable		25,500
To record cash received from customer.

2. Accrued Interest Income

Scenario:
You earn $500 in interest for August. It’s not yet received but due next month.

Journal Entry for Accrual:

Date	Account Title	Debit ($)	Credit ($)
Aug 31	Accrued Interest Income A/c Dr	500
	To Interest Income		500
To accrue interest earned in August.

Entry When Cash is Received:

Date	Account Title	Debit ($)	Credit ($)
Sep 5	Cash A/c Dr	500
	To Accrued Interest Income		500
To record interest income received.

3. Construction Project Accrual

Scenario:
A construction firm signs a $500,000 contract for 5 months. After 2 months, 40% the project is complete but not billed.
Accrued Revenue: 500,000 × 40% = $200,000

Journal Entry:

Date	Account Title	Debit ($)	Credit ($)
Month-End	Accrued Revenue A/c Dr	200,000
	To Construction Revenue		200,000
To record revenue for work completed but not billed.

4. Telecommunications Accrual

Scenario:
A mobile company offers a postpaid plan of $80/month. in mid-month, $40 worth of service is delivered but not billed.

Journal Entry:

Date	Account Title	Debit ($)	Credit ($)
Month-End	Accrued Revenue A/c Dr	40
	To Service Revenue		40
To record service provided but not yet billed.

🧠 Summary Table: Accrual Types

Type of Accrual	Balance Sheet Impact	Income Statement Impact
Accrued Expense	Increase Liabilities	Increase Expenses
Prepaid Expense	Increase Assets	No Immediate Impact
Accrued Revenue	Increase Assets	Increase Revenue
Deferred Revenue	Increase Liabilities	No Immediate Impact