Accrued revenue refers to income earned but not yet billed or received. It typically arises when a company delivers goods or services but hasn’t yet invoiced the customer by the end of the accounting period. 🔹 Key Characteristics: Revenue is recognized before cash is received. Typically recorded as a receivable on the balance sheet. Common in service-based businesses with long-term projects or subscriptions. 🧾 Example of Accrued Revenue: Let’s say your company provides consulting services and charges ₹100,000 per month. The client contract starts on March 20th, and you complete the first month of service by April 19th but haven’t yet sent the invoice. Even though no invoice is issued, the revenue earned from March 20th to March 31st (say, ₹40,000) must be recorded as accrued revenue in March's books. Deferred revenue (also known as unearned revenue) is money received before services are performed or goods are delivered. It is considered a liability because the company owes a product or service to the customer. 🔹 Key Characteristics: · Cash is received before revenue is earned. · Initially recorded as a liability and converted to revenue as the service is delivered. · Common in SaaS, subscriptions, advance payments, or long-term contracts. 🧾 Example of Deferred Revenue: Your company receives ₹1,20,000 on January 1st for a 12-month software subscription. Since the service is delivered over 12 months, each month’s revenue is ₹10,000.