Glossary
Deferred revenue
Deferred revenue is money you have received for goods or a service you have not yet provided, so it counts as income only once you deliver.
What it means for a shop owner
It appears on the balance sheet as a liability, not as revenue. Examples are a prepaid yearly subscription, a gift card sold and a deposit. Each month you deliver the service, you move a part of it to revenue.
A worked example
You receive 1200 for a year subscription. After one month you record 100 as revenue and 1100 stays deferred.
Related
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