How is accrued revenue classified?

Accrued revenue is classified as a current asset because it represents amounts that are earned by the business but have not yet been received in cash nor formally billed to the customer at the end of the accounting period. As a current asset, accrued revenue is expected to be collected within one year or within the operating cycle of the business, whichever is longer. This classification reflects the company's right to receive payment for goods or services that have already been provided, thus making it a resource that is anticipated to convert into cash in the near future.

By accurately identifying accrued revenue as a current asset, it highlights the business's short-term financial position and its ability to generate cash flow from ongoing operations.