Examples Of Deferred Revenue Expenditure

For example revenue used for advertisement is deferred revenue expenditure because it will keep showing its benefits over the period of two to three years.

Examples of deferred revenue expenditure. Here are some examples. The payment the company gets represents something owed to the customer. Yes deferred revenue is a liability and not an asset. Examples of deferred revenue expenditure.

Following are the examples of revenue expenditure. The amount will be written off over a subsequent number of years. Thus now you know the deferred revenue expenditures explanation and examples. Meaning of revenue expenditure.

Revenue expenditure refers to those expenditures which are incurred during normal business operation by the company benefit of which will be received in the same period and the example of which includes rent expenses utility expenses salary expenses insurance expenses commission expenses manufacturing expenses legal expenses postage and printing expenses. In business deferred revenue expenditure is an expense which is incurred while accounting period. And the result and benefits of this expenditure are obtained over the multiple years in the future. Thus capital expenditure is capable to convert into cash by selling fixed assets but in case of deferred revenue expenditure the business enterprise cannot sell it to other firms.

Deferred revenue expenditure is a expense but revenue in nature which is incurred during an accounting year but its benefit are to derived over the number of following accounting period. Advertisement expenses is a example of deferred revenue expenditure. The firm makes a substantial investment in certain activities like sales promotion activities the benefit for which will be incurred over the number of accounting periods but the expenditure is born in the same year. Deferred revenue expenditure is an expenditure which is revenue in nature and incurred during an accounting period however related benefits are to be derived in multiple future.

Sometimes some expenditure is of revenue nature but its benefit likely to be derived over a number of years. Repair of machinery building furniture etc. Deferred revenue expenditure is that expenditure for which payments will be made immediately in the year occurred but wont be accounted full in the books of accounts. Such expenditure is called deferred revenue expenditure.

All companies selling products or providing services that require prepayments deal with deferred revenue. Deferred revenue expenditure meaning. It will be easier to understand the meaning of deferred revenue expenditure if you know the word deferred which means holding something back for a later time or postpone.