Page 18 - cfi-Accounting-eBook
P. 18
The Corporate Finance Institute Accounting
Deferred and accrued revenue
Deferred Revenue Accrued Revenue
Definition When cash is received prior to When revenues are earned but
earning revenue by delivering goods not yet recorded at the end of the
or services, the company accounting period because cash
records a journal entry to recognize changes hands after the service is
unearned revenue. performed or goods delivered.
• Gift cards • A customer acquired goods
Situational examples
• Airline miles and agreed to pay the
• Subscriptions to newspaper and following month
magazines • A company earned interest
revenue from the bank on its
checking account and had not
yet recorded it
Adjustment Journal Entry XYZ Company delivered services in XYZ Company delivered services
September for an $800 payment on the last day of the month and
that was made three months ago. sent an invoice for $4,400.
DR Unearned Revenue: 800 DR Accounts Receivable: 4,400
CR Sales Revenue: 800 CR Sales Revenue: 4,400
corporatefinanceinstitute.com 18
