Accrual accounting: when income is earned
Earned, even before paid
Try the interactive lessonLet’s make it simple.
Accrual accounting records revenue when earned and expenses when incurred, even when cash moves on a different day.
Picture this.
You tutor a student in March and receive $80 in April. Under accrual accounting, March has $80 of revenue and $80 of accounts receivable.
Check your understanding
You earn $80 for tutoring in March, but get paid in April. In which month do you record revenue under accrual accounting?
Think it through, then reveal the explanation
March. The service was delivered then. Accounts receivable tracks the amount still owed to you.
Build the bigger picture.
- Deliver the service
- Record revenue and receivable
- Receive payment
- Clear the receivable
Follow an earned-but-unpaid sale through to collection.
Now make it move.
Bring this idea to life with interactive practice, a 3D illustration and tips along the way. Your progress stays on your device.
Practice Timing Matters