What are accrued revenues?

Accrued revenues refer to revenues that a company recognizes before it actually receives cash for the services or products provided. This concept is grounded in the accrual basis of accounting, which dictates that revenues should be recognized when they are earned, regardless of when the cash payment is received. This means that if a company delivers goods or renders services and has a right to receive payment in the future, it will recognize that revenue immediately in its financial statements, reflecting the economic activity that has taken place.

In this way, accrued revenues enhance the accuracy of financial reporting, providing a clearer picture of a company's performance by acknowledging all revenue-generating activities as they occur. This recognition ensures that financial statements align more closely with the timing of the actual economic events, making them more relevant to users of the financial information.