Accrued Income as Earned but Unreceived Revenue

Steps:

• Identify accrued income as revenue earned in the period but not yet received in cash.
• Recognize it in the income statement to match revenues with the period earned, per accrual accounting principle.
• Record it on the balance sheet as a current asset, like "accrued receivables."
• Confirm treatment: debit asset, credit income.

Why A is correct:

• Accrued income is added to the income statement as revenue (increasing net income) and shown as a current asset on the balance sheet, following the matching principle in accrual accounting.

Why the others are wrong:

• B: Incorrectly classifies it as a liability; it's an asset owed to the entity.
• C: Wrongly deducts from income; it increases revenue earned.
• D: Both deducts from income and misclassifies as liability; opposites of correct treatment.

Final answer: A