Accrued revenues are revenues that are earned in a period but are both unrecorded and not yet received in cash. Which of the following best describes accrued revenues?

• A. Revenues that have been earned but neither recorded nor received in cash
• B. Revenues that have been recorded but not yet earned
• C. Revenues that have been received in cash but not yet earned
• D. Revenues that have been recorded and received in cash

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of accrued revenues. Accrued revenues are revenues that a company has earned during a specific period but has not yet recorded in its accounting books and has not received payment for in cash.
2. Step 2: Analyze the options provided in the problem. The goal is to identify the option that aligns with the definition of accrued revenues.
3. Step 3: Eliminate incorrect options. For example, 'Revenues that have been recorded but not yet earned' refers to unearned revenues, not accrued revenues. Similarly, 'Revenues that have been received in cash but not yet earned' also refers to unearned revenues.
4. Step 4: Focus on the correct description. Accrued revenues are specifically 'Revenues that have been earned but neither recorded nor received in cash,' as this matches the definition provided in Step 1.
5. Step 5: Confirm your understanding by reviewing the concept of accrual accounting, which ensures that revenues are recognized when earned, regardless of when cash is received or recorded.