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Deferred revenue

Rudrayani Shedjale (Assistant Accountant) (751 Points)

28 March 2019

I have read that deferred revenue is the advance that we have received.

e.g. if we have recd advance in the month of March for the goods that we are going to deliver in June isn't it called deferred revenue ?

so its our liability?

please advise

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7 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 28 March 2019

yes advance that is received against future sale of goods is our current liability.it shud be deferred and shall be recognized as Income to revenue month on month

Mohit Gupta (article) (164 Points)
Replied 28 March 2019

Yes deferred revenue is a liability
At the time of receiving a advance, we record the entry
Bank A/c Dr. xxx
To Def.Revenue xxx

When the product or services is delivered over time, it is recognised as revenue in income statement
Def.Revenue Dr. xxx
To Sale xxx

Rudrayani Shedjale (Assistant Accountant) (751 Points)
Replied 28 March 2019

Thanks a lot

Deferred Revenue (current liability) is the advance recd for the services to be rendered in future

Deferred/Prepaid Expense (current asset) is the advance payment for the expenses to be incurred in future

But then if we read deferred revenue expenditure it's the expense which has been covered in an accounting period. Is it different than the first two concepts?