Revenue Accruals Journal Entry With Examples

What Is Accrued Revenue?

Accrued revenue refers to revenue that has been earned through delivering goods or services but not yet billed to the customer and not yet paid. and it recorded under the accrual accounting method to ensure revenues are recognized in the period they are earned, as per the GAAP revenue recognition principle.

Accrued revenue is reported as a current asset on the balance sheet, even though cash has not been received. Once invoiced, it transitions to accounts receivable.

🧠 Key Takeaways

• Accrued revenue is an asset — it represents money earned but not yet billed or collected.
• It follows GAAP and the accrual method of accounting.
• It is the opposite of unearned (deferred) revenue, which is a liability.
• Accrued revenue examples include unbilled sales, services performed but not invoiced, and earned interest income.

📚 Revenue Accruals Journal Entry: Format & Examples

🔹 Example 1: Accrued Revenue for Product Sales (Unbilled)

A business ships $25,500 worth of products on August 31, but invoices the customer on September 1.

📌 Journal Entry at Month-End (August 31):

Date	Account Title	Debit ($)	Credit ($)
2025-08-31	Accrued Revenue A/c Dr	25,500.00
	To Sales Revenue		25,500.00

Narration: Being unbilled revenue recorded for products shipped on August 31.

This entry ensures August’s revenue correctly recognized before billing occurs.

🔁 Journal Entry to Reverse Accrued Revenue (On Billing – September 1):

Date	Account Title	Debit ($)	Credit ($)
2025-09-01	Sales Revenue A/c Dr	25,500.00
	To Accrued Revenue		25,500.00

Narration: Being reversal of accrued revenue upon billing the customer.

🧾 Standard Journal Entry for Customer Invoice:

Date	Account Title	Debit ($)	Credit ($)
2025-09-01	Accounts Receivable A/c Dr	25,500.00
	To Sales Revenue		25,500.00

Narration: Being invoice issued to customer for products delivered.

💵 Journal Entry When Cash is Received:

Date	Account Title	Debit ($)	Credit ($)
2025-09-10	Cash A/c Dr	25,500.00
	To Accounts Receivable		25,500.00

Narration: Being cash received from customer for sales invoice.

🔹 Example 2: Accrued Interest Income

A company earns $500 interest in August on loan but receives payment in September.

📌 Accrued Interest Revenue Journal Entry (August 31):

Date	Account Title	Debit ($)	Credit ($)
2025-08-31	Accrued Interest Income A/c Dr	500.00
	To Interest Income		500.00

Narration: Being interest income earned but not yet received.

💵 On Receiving Cash (September 5):

Date	Account Title	Debit ($)	Credit ($)
2025-09-05	Cash A/c Dr	500.00
	To Accrued Interest Income		500.00

Narration: Being interest income received from borrower.

❓FAQs: Understanding Accrued Revenue

📌 Is Accrued Revenue nSame as Unearned Revenue?

No.

• Accrued revenue = Revenue earned before payment. → Asset
• Unearned revenue = Payment received before earning. → Liability

📌 What’s the Difference Between Accrued Revenue & Accounts Receivable?

• Accrued Revenue: Revenue earned, not yet invoiced
• Accounts Receivable: Revenue earned, already invoiced
  Both are current assets, but at different billing stages.

📌 Why Is Accrued Revenue an Asset?

Because it represents future economic benefit—you’ve earned money, but haven’t yet received it. It will convert to cash soon after billing.

📌 What Type of Transactions Use Accrued Revenue?

• Product shipped before billing
• Consulting services completed but not invoiced
• Interest earned but not yet received
• Dividend income earned but not paid

🧾 Recap: Accrued Revenue Journal Entries Summary

Transaction	Debit Account	Credit Account
Product/service earned, not billed	Accrued Revenue	Sales Revenue
Interest earned but unpaid	Accrued Interest Income	Interest Income
Billing customer after accrual	Sales Revenue	Accrued Revenue
Issuing invoice	Accounts Receivable	Sales Revenue
Cash received from customer	Cash	Accounts Receivable
Cash received for interest	Cash	Accrued Interest Income

🎯 Final Thoughts

Accrued revenue helps match income with correct accounting period, even if cash hasn’t been received. It follows accrual principle in GAAP and is critical for preparing accurate financial statements.

💡 Pro Tip: Use reversing entries to clean up accrued revenue once invoices are issued. This ensures no double-counting.