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What is the difference Between Unearned Revenue and Deferred Revenue?

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What is the difference Between Unearned Revenue and Deferred Revenue?
posted Sep 27, 2017 by Swati Tyagi

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1 Answer

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Deferred and unearned revenue are accounting terms that both refer to revenue received by a company for goods or services that haven't been provided yet. In the company's books, deferred/unearned revenue (henceforth referred to solely as deferred revenue) is classified as revenue/profit, but is listed as a liability on the balance sheet until the goods have been delivered, or services have been performed.

In other words, deferred revenue requires some action on the part of the company before it can be considered an asset. If, for whatever reason, the company is unable to deliver the goods or services as promised, the deferred revenue must be refunded.

It's also important to note that deferred revenue can be used to finance expenses necessary to complete the job.

answer Oct 3, 2017 by Ati Kumar
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