We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Accrued Income?

Malcolm Tatum
By
Updated Feb 19, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Accrued income is that amount of income that is generated by the sale of goods and services, but has not yet been received by the supplier. The term can also apply to any income that is earned due to an investment fund of some type, but that has not yet been received by the investor. In both instances, the income continues to collect, or accrue, until it is paid in full on or by the agreed-upon date.

As it relates to investments, accrued income accumulates for one or more economic periods and is eventually paid in full to the investor. One example of this type of activity has to do with the accumulation of earnings generated by the activity of a mutual fund that is structured to disburse earning payments to investors on an annual basis. Throughout the year, the earnings are accrued and attributed to the investor. On the date cited in the agreement governing the investment, the fund administrator deposits the income into the investor’s account, or prepares a check that is mailed to the investor.

The same general approach applies to accrued income that is connected with the sale of goods or services. A supplier may contract with a customer to supply a cumulative number of units of a given product, with shipments broken down into equal amounts over a period of several months. Rather than remitting payment for each of those shipments, the customer defers payment until the total quantity is received. At that point, the supplier bills the customer for the cumulative amount of the orders and awaits payment that is rendered in accordance to the contract. Until that payment is received, the face value of the invoice is classified as accrued income.

With proper use of the accrued income model, the supplier is able to accrue a percentage of the income generated to each period where a shipment takes place. This approach helps to keep the balance between operational costs and sales revenue in sync, while also making it easier to track the amount of revenue generated by each individual shipment. For the customer, the ability to defer payment until all shipments are completed makes it possible to benefit from the use of those goods over several periods, without incurring any type of late charges on the orders. This model can be especially effective when large quantities of products are involved, and the products are intended for use in the customer’s generation of income to settle the invoice when it comes due.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum , Writer
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

Discussion Comments

Malcolm Tatum

Malcolm Tatum

Writer

Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.