Deferred revenue

DEFERRED REVENUE IS NOTHING BUT AN UNEARNED REVENUE ...MEANS THE REVENUE THAT U HAVE YET TO EARN....I.E. ADVANCE RECEIVED FOR A SERVICE THAT U WILL BE GOING TO PROVIDE IN NEAR FUTURE....FOR EXAMPLE - THE ANNUAL  SUBSCRIPTION FEE THAT A MAGAZINE  COMPANY RECEIVED IN ADVANCE IS NOT RECOGNIZED AS REVENUE AT THE TIME THE FEE RECEIVED AS THE COMPANY HAS YET TO PERFORM ITS LIABILITY TOWARDS SUCH PAYMENT...AND THE ACCOUNTING TREATMENT FOR SUCH IS AS FOLLOWS...

THE COMPANY RECEIVED RS 12000/-  AS ANNUAL SUBSCRIPTION FOR A MONTHLY MAGAZINE --

WHEN ANNUAL FEE RECEIVED IN ADVANCE-

BANK A/C  DR.                                               12000

     TO DEFERRED REVENUE A/C                                          12000

AFTER 3 MONTHS WHEN U HAVE SENT 3 MAGAZINES SO ENTRY WILL BE

DEFERRED REVENUE A/C DR        3000  (ON PROPORTIONATE BASIS)

  TO SALES A/C                                              3000

AFTER 6 MONTHS 

 DEFERRED REVENUE A/C DR      6000 

       TO SALES                                                  6000

AND ON THE BALANCE SHEET DATE IF ANY AMOUNT RETAINS WITH DEFERRED REVENUE A/C ...IT WILL TREATED AS LIABILITY AND SHOWN IN CURRENT LIABILITY....

DHANYAWAAD