Deferred Revenue Balance Sheet Account

As the income is earned the liability is decreased and recognized as income.

Deferred revenue balance sheet account. Record the deferred revenue. The amount has been deferred or postponed for future recognition until the goods or services relating to the balance. The amount of accrued interest for the party who is receiving payment is a credit to the interest revenue account and a debit to the interest receivable account. When the company receives payment.

The recipient of such prepayment records unearned revenue as a. The liability is rolled onto the balance sheet as a short term liability while the interest expense is presented on the income statement. In this transaction the cash asset account and the unearned revenue liability account are increasing. Deferred revenue is listed as a liability on the balance sheet because under accrual accounting the revenue recognition process has not been completed.

The deferred revenue account is normally classified as a current liability on the balance sheet. So each month the company will transfer the 1 12 portion of the total amount collected. Deferred revenue or unearned revenue refers to advance payments for products or services that are to be delivered in the future. The balance represents advance payments received from customers for products that will be shipped or services that will be performed in the future.

In the example from part 1 the company receives a 120 advance payment relating to a twelve month magazine subscription. Recording deferred revenue applies to the company s balance sheet. Each month the company will transfer inr 200 from inr 2400 to monthly p l account once the company delivers monthly publication of the magazine to the customer and the rest amount will become deferred revenue in the balance sheet for the next month. Here is an example for a 1 000 payment for services that have not yet been performed.

However if the deferred income is not expected to be realized as actual revenue then it can be reported as a long term liability. The company receives cash an asset account on the balance sheet and records deferred revenue a liability account on the balance sheet. Deferred revenue is a liability account found on the company s balance sheet. Deferred revenue on balance sheet typically it is reported under current liabilities.