Deferred revenue意思

Deferred revenue, also known as unearned revenue, is a term used in accounting to describe advance payments that a company receives for goods or services that it has not yet delivered. This type of revenue is recognized on the income statement as the goods or services are delivered, rather than when the payment is received.

For example, if a company sells a one-year subscription to its software and receives payment upfront, the entire payment would be recorded as deferred revenue. As each month passes, and the company provides the software service, a portion of the deferred revenue would be recognized as revenue on the income statement.

Deferred revenue is treated as a liability on the balance sheet because it represents a future obligation to the customer to provide the goods or services that have been paid for. As the company fulfills its obligation, the liability is reduced and revenue is recognized.

Recognizing revenue over time, rather than immediately upon receipt of payment, is in accordance with the accrual basis of accounting, which matches revenues with the expenses incurred to generate those revenues. This provides a more accurate picture of a company's financial performance and health.