MASTERCLASS Investment – Accrued Revenue

MASTERCLASS Investment – Accrued Revenue

Investment – Accrued Revenue

Revenue is the amount of money a company actually receives over a specific period, which includes discounts and deductions for returned sales etc. It is the “top line” or “gross income” figure from which costs of goods are subtracted to determine gross profit.

Accrued Revenue is revenue for goods or services that have been sold or completed but may have not yet been billed and/or paid for. Accrued Revenue is income that has been incurred but not received, for example monthly rent that is due in arrears, or following the monthly rental period. The income has been earned (since an individual or company rented the item) but the revenue has not been received.

It is recorded on the Balance Sheet as an asset account. This is important to the valuation of a company, particularly in the service industry, where invoicing/billing typically occurs after the work or service is complete. Without this on financial reports, the company would appear to have much lower revenues, and may not have a fair method to balance expenses associated with the accrued revenue.

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