Deferred Revenue and Recognition

To configure deferred revenue, show when the payments hit accounts receivable, and reflect the recognition of the deferred revenue, use the Deferred Revenue and Recognition template.

Deferred revenue is budgeted and affects the Net Gain/Loss line on the Projected Balance Sheet. An annual total is also provided. These values affect two balance sheet accounts. The total increases a liability account (such as Deferred Revenue) annually, quarterly, or monthly based on the payment frequency field. The budgeted amounts are used to recognize and reduce the deferred revenue account in the months in which they are budgeted. The total also increases an asset account (such as Accounts Receivable) annually, quarterly, or monthly and is amortized away from that line according to the Amortization Schedule.

Deferred Revenue Template

The example illustrates deferred revenue that occurs in the first month of the fiscal year. If the expense occurs in a later month, you’d specify the correct starting month, and add another line to the SPW to recognize the carryover expense from the previous year.