Deferred Income Vs Unearned Revenue

When a portion of the deferred revenue is earned the deferred revenue account is lessened by a debit of the same amount whereas the revenue account is credited.

Deferred income vs unearned revenue. It refers to payments received in advance of services or goods that have not yet been delivered. Unearned revenue is the revenue which is not yet handed over to the recipient but is recorded in your balance sheet. It is also classed as unearned income i e. Deferred revenue is a liability because it refers to revenue that has not yet been earned but represents products or services that are owed to the customer.

Is classified on a company s balance sheet as a liability rather than an asset. Deferred revenue can come in many forms not just in the exchange of goods and services. Deferred revenue or unearned revenue refers to advance payments for products or services that are to be delivered in the future. The recipient of such prepayment records unearned revenue as a.

Deferred revenue also known as unearned revenue refers to advance payments a company receives for products or services that are to be. Following the recipient of a deferred revenue the company has an obligation to deliver goods or services to the customer at a future date. Unearned revenue dr xx revenue cr xx. Deferred and unearned revenue are accounting terms that both refer to revenue received by a company for goods or services that haven t been provided yet.

They both refer to an item that initially goes on the books as a liability that is an obligation that the company must fulfill but later becomes an asset or something that increases the net worth of the company. On a company s balance sheet deferred revenue and unearned revenue are the same thing. Unearned or deferred income is usually used in accrual accounting. Thus it is not yet revenue.

Deferred revenue is also called unearned revenue since the revenue is yet to be earned. Both unearned revenue and deferred revenue are characterized as revenue or profit for a particular company that supplies goods or services but they are listed as liabilities in the accounting books because the said income or revenue is considered as not yet earned or recognized. The payment has been received but not yet earned.