What characterizes accrued revenue?

Accrued revenue is characterized by the recognition of revenue when it is earned, regardless of when payment is actually received. This aligns with the accrual accounting principle, which states that revenue should be recognized when it is realized and earned, not necessarily when cash is exchanged.

In option B, sales are recorded at the time of shipment, which indicates that the company has fulfilled its obligation to deliver the product or service, thus earning the revenue. This means the company recognizes the revenue in its financial statements even if the customer has not yet made the payment. The emphasis on the timing of the shipment reflects the completion of the sales transaction, which is a key aspect of how accrued revenue is recognized.

Other choices do not adequately define accrued revenue within the framework of accrual accounting. For example, unrecorded payments would refer to cash received without corresponding revenue recognition, and revenue recognized based solely on cash flow does not align with accrual principles. Similarly, expenses tied to cash payments pertain more to the cash basis of accounting rather than revenue recognition under accrual accounting.