Q.What are accrued incomes ?

Accrued income = income earned but not yet received by the end of the accounting year; it is added to the income in the P&L A/c and shown as a current asset in the Balance Sheet.

In the Tamil Nadu HSC Class-11 Accountancy syllabus, accrued income is one of the standard year-end adjustments that flow from the accrual (matching) concept — income belongs to the year in which it is earned, not merely the year in which cash is received.

Meaning: Accrued income (also called outstanding income or income earned but not received) is income that relates to the current accounting year — the service has been rendered or the right to receive has arisen — but the money has not actually been received by the closing date. Common examples are commission earned but not received, interest on investments due but not collected, and rent earned but not yet received.

Why it is recorded: If it were ignored, the year's profit would be understated (income earned is left out) and the assets would be understated too. To give a true and fair view, the accrued amount is recognised in the year it is earned.

Accounting treatment (double effect): …