Accrued Assets

Introduction

• Lecture delivered by William Terando on May 10, 2018.
• Part of the AC203 course, Module 3, Lesson 6.

Definition of Accrued Assets

• Accrued assets, also known as accrued revenues, refer to revenues that have been earned but not yet received in cash or recorded.

Importance of Accrued Assets

• Essential for matching the revenue with the period it was earned, not when it is received.
• Ensures that financial statements reflect the true financial position by accounting for all earned revenues.

Accounting for Accrued Assets

• Recorded as an asset on the balance sheet.
• Typical adjusting journal entry includes:
  • Debit to an asset account (e.g., Accounts Receivable).
  • Credit to a revenue account.

Examples

• Interest earned but not yet received.
• Services performed but not yet billed to clients.

Impact on Financial Statements

• Enhances the accuracy of financial statements.
• Affects both the income statement and the balance sheet.

Conclusion

• Accrued assets play a critical role in the accrual basis of accounting.
• Understanding accrued assets helps in better financial analysis and decision-making.

Additional Resources

• Educreations platform for further lessons and examples in accounting.