Accrued revenue is revenue earned but not yet billed or collected. How is it recorded?

• A. Debit Revenue; Credit Accounts Receivable
• B. Debit Cash; Credit Revenue
• C. Debit Revenue; Credit Accounts Receivable
• D. Debit Accounts Receivable; Credit Revenue

Answer: (D)

When revenue is earned but not yet billed or collected, you recognize the revenue and record what customers owe as an asset. The correct journal entry is to debit Accounts Receivable to show the asset increase and credit Revenue to reflect the earned income for the period. This aligns with the accrual basis of accounting: revenue is recognized when earned, and an amount owed by customers is recorded as an asset.

Other options would misstate the effect: debiting revenue would reduce revenue (wrong for earned income), debiting cash would imply cash has been received (which isn’t the case), and crediting accounts receivable would decrease the asset instead of increasing it.