What is Deferred Revenue?
A definition of Deferred Revenue
“Deferred revenue is money received by a business for goods or services yet to be delivered or performed. It is listed as a liability on the balance sheet until the product or service is provided.”
Business Glossary > What is Deferred Revenue?
Examples of Deferred Revenue in a Sentence:
Deferred revenue is recorded as a liability on the balance sheet.
Our company received deferred revenue from annual subscription sales.
Deferred revenue will be recognized when the service is completed.
Why is Deferred Revenue Important in Business?
Deferred revenue is important for businesses as it affects cash flow and financial reporting. It reflects the company’s obligation to deliver goods or services in the future and ensures accurate financial representation.
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Associated Terms
Here are some associated business terms and synonyms for “Deferred Revenue”:
- Unearned Revenue
- Advance Payments
- Prepaid Income
Adobe’s Deferred Revenue
Adobe often records deferred revenue due to its Creative Cloud subscriptions being paid annually. Although payments are received upfront, revenue is recognized monthly as services are provided.
Final Notes on Deferred Revenue
Understanding deferred revenue is crucial for accurate accounting and financial analysis. Companies must ensure they recognize revenue properly as obligations are fulfilled to comply with accounting standards.
This has been a definition of Deferred Revenue meaning.
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