Deferred Revenue

Definition: Deferred Revenue is the accounting treatment of advance payments a company receives for products or services that are to be delivered or performed in the future. The company that receives the prepayment records the amount as deferred revenue, a liability, on its balance sheet.
Any receipt of payment before the delivery of products or services is called "deferred revenue". It is also known as "unearned revenue". The company receiving deferred revenue must first deliver the products or services for which it has already been paid and is liable to write off its products/services for the received amount.

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More on accounting and auditing: Accounting Cycle, Accounts Payable, Accounts Receivable, Accrued Revenue, Amortization, more...

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