Deferred Revenue

Deferred revenue is money received for goods or services that have not yet been delivered. It is recorded as a liability on the balance sheet until the revenue is earned.

Common examples include annual subscriptions or prepaid service contracts. As the service is provided, deferred revenue is recognized on the income statement. Under the accrual basis, deferred revenue is recorded as a liability until earned.

Related Terms

Accrual Basis

Accrual basis accounting recognizes revenue when it is earned and expenses when they are incurred, r...

Income Statement

An income statement is a financial statement that summarizes revenue, expenses, and profit over a sp...

Balance Sheet

A balance sheet is a financial statement that reports a company's assets, liabilities, and sharehold...

Prepaid Expense

A prepaid expense is a payment made in advance for goods or services to be received in the future. I...

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