Deferred Revenue Meaning And Journal Entry

What is deferred revenue.

Deferred revenue meaning and journal entry. When you receive the money you will debit it to your cash account because the amount of cash your business has increased. A customer pays you 180 for a 12 month candy subscription. Journal entry of deferred revenue the following deferred revenue journal entry provides an outline of the most common journal entries in accounting. In simple terms deferred revenue means the revenue that has not yet been earned by the products services are delivered to the customer and is receivable from the same.

You need to make a deferred revenue journal entry. The seller records this payment as a liability because it has not yet been earned deferred revenue is common among software and insurance providers who require up front payments in exchange for service periods that may last for many months. And you will credit your deferred revenue account because the amount of deferred revenue is increasing. Deferred revenue is a payment from a customer for future goods or services.