ACCRUED INCOME

Accrued Income is that income which has been earned during the accounting period but has not been received . Such income is also called Outstanding Income or Income Earned but not yet received . 

Examples of such incomes are commission receivable , Interested on investment receivable or Interest accrued but not due , etc . As per the accrual concept of accounting , total income earned during the period , wheather received or not , should be shown in the Final Accounts otherwise both profit and also assets will be shown at lesser amount .

Adjustment entry passed is :

Accrued Income ( Say,Commission)A/c.   .Dr.

  To Concerned Income ( Say , Commission ) 

( Being the income ( Say , Commission ) earned but not received accounted in the books ) 

Thereafter , Accrued Income is treated in the Final Accounts as follows ;

1. Accrued Income is added to the amount of Concerned income in the profit and loss Account ( say , commission earned but not received is added to commission shown in Commission Account ) ; and 

2. Accrued Income is shown on the assets side of the Balance Sheet as a separate item under current assets .

Accrued Income if given in Trial Balance , means adjusting entry is already passed before the preparation of Trial Balance . Income account as shown in Trial Balance includes the accrued amount of income . In such a case , the Accrued Income is shown only in the Balance Sheet as an asset .