What is a deferred revenue system?

Question

Accepted Answer

Deferred revenue is income received for services not yet performed or goods not yet delivered, recorded as a liability.

Represents advance payments for services or products.
Common in subscription services (e.g., software subscriptions).
Example: A magazine subscription paid upfront for a year.
Recognized as revenue when the service is performed or product delivered.
Important for accurate financial reporting and cash flow management.

Accepted Answer

Deferred Revenue: Payments received before delivering goods/services.
Recognized as liability, converted to revenue upon delivery.
Represents unearned income, requiring future service fulfillment.
Accurate financial reporting requires proper revenue recognition timing.

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What is a deferred revenue system?

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