The income which are earned during the current accounting year but have not been received by the end of the same year is known as:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Accrued income.
It may happen that certain items of income such as interest on loan, commission, rent, etc. are earned during the current accounting year but have not been actually received by the end of the same year. Such incomes are known as accrued income. The adjusting entry for accrued income is : Accrued income A/c Dr. To Concerned income A/c . The amount of accrued income will be added to the related income in the profit and loss account and the new account of accrued income will appear on the asset side of the balance sheet.