Deferred Revenue Definition

Terms Similar To Deferred Revenue

The deferred revenue account is normally classified as a current liability on the balance sheet. It can be classified as a long-term liability if performance is not expected within the next 12 months. As the recipient earns revenue over time, it reduces the balance in the deferred revenue account and increases the balance in the revenue account . Deferred revenue is a payment from a customer for future goods or services. 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.

Recognition Of Deferred Revenue