Income earned as of the reporting date but not legally due to be paid to the reporting entity until subsequent to the reporting date is known as:

Question

Options

• AInvestment income accrued
• BInterest income
• CReal state income
• DInvestment income depreciated

• A
  70% (26)
• B
  5% (2)
• C
  8% (3)
• D
  16% (6)

Explanation

Investment income accrued (A) is the precise accounting term for income that has been earned by the reporting date but is not yet legally receivable - the classic definition of an accrual: revenue recognized when earned, not when received.

Why the distractors are wrong:

• B (Interest income) names a type of income, not a timing concept - it doesn't capture the "earned but not yet due" distinction.
• C (Real estate income) is a source of income (property rentals, etc.), entirely unrelated to the accrual timing described.
• D (Investment income depreciated) is nonsensical in context - depreciation applies to asset values, not to income timing.

Memory tip: Think of "accrued" as income that has accumulated on the clock but hasn't hit your bank account yet - you've earned it, the calendar proves it, but the check hasn't arrived. Whenever you see "earned by the date / paid after the date," the answer is always an accrual.

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