I'm getting a bit confused and hope someone can please help me. I understand the concept of deferred income, and also work in progress.
What I'm struggling with is the term accrued income. To me this seems the same as work in progress ie work you've completed or started that you haven't yet invoiced.
Can anyone please explain the difference between accrued income and work in progress?
Work in progress is work still on going, you cant receive any payment for it until it is finished, accrued income is for work that has finished, you should have received payment for it but you have not received anything towards it yet, so you accrue for it.
Am I correct in thinking then that as soon as a job is complete it is no longer work in progress and should therefore be invoiced. If the job hasn't been invoiced it becomes accrued income up to the point an invoice is raised?
I guess to have accrued income would be rare in practice, as I imagine jobs are invoiced as soon as they are completed.
The easiest way of explaining accrued income would be with interest. You may have earned (accrued) interest from say Apr - Aug but it doesn't hit your account until 15th Sep. Thus if your accounts ended on 31st Aug you would show the calculated amount of interest as accrued income. Bit like a debtor really.
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Jenny
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