Which classification does "Accrued Income" belong to?

Accrued income refers to income that has been earned but not yet received in cash. It represents a future economic benefit that the business expects to realize, as it reflects work that has been completed or services provided for which payment is still outstanding.

Classifying accrued income as an asset makes sense because it represents a resource controlled by the business that is expected to generate cash inflow in the future. In the accounting equation (Assets = Liabilities + Equity), it is essential for businesses to recognize accrued income as part of their assets to accurately represent their financial position.

This classification underscores the importance of recognizing earned income at the point it is accrued, rather than waiting until cash is received. Properly identifying accrued income as an asset enables stakeholders to see a more accurate picture of the company's financial health and expected future cash flows.