{"id":3804,"date":"2026-02-15T00:42:40","date_gmt":"2026-02-15T06:42:40","guid":{"rendered":"https:\/\/www.zoomshift.com\/blog\/?p=3804"},"modified":"2026-03-29T06:21:08","modified_gmt":"2026-03-29T11:21:08","slug":"deferred-revenue","status":"publish","type":"post","link":"https:\/\/www.zoomshift.com\/blog\/deferred-revenue\/","title":{"rendered":"Deferred Revenue"},"content":{"rendered":"

<\/span>What is deferred revenue?<\/span><\/h2>\n

Deferred revenue refers to a payment that a company has received for goods or services that it hasn\u2019t yet delivered.<\/p>\n

The term is used in accrual counting, in which income is only recorded once it is earned, i.e. the product or service has been completed or delivered. Until that happens, deferred revenue is considered a liability, instead of an asset.<\/p>\n

<\/span>Why is deferred revenue important?<\/span><\/h2>\n

Properly reporting deferred revenue is important because it helps a company more accurately assess its net worth. Given that deferred revenue is a liability, keeping track of it makes sure companies don\u2019t become inaccurately overvalued.<\/p>\n

Similarly, keeping track of deferred revenue gives a company a better idea of its full financial picture. If a company doesn\u2019t take deferred revenue into account, it could start spending that money on other endeavors, leaving it without enough funds to complete the products that the customer ordered.<\/p>\n

<\/span>Deferred revenue examples<\/span><\/h2>\n

Common examples of deferred revenue are:<\/p>\n

    \n
  • Annual subscriptions to SaaS products<\/li>\n
  • Advance rent or insurance payments<\/li>\n
  • Pre-orders<\/li>\n<\/ul>\n

    For example, let\u2019s say you wanted to pre-order a new video game that is coming out. If you pay the store $60 for the pre-order, that would be considered deferred revenue because the store has not provided you with the product yet, resulting in your pre-order being a liability for the game store.<\/p>\n

    <\/span>Tips for deferred revenue accounting<\/span><\/h2>\n

    To account for deferred revenue, start by identifying the time period you\u2019re looking at. Then, take note of all the transactions for which you have received payment but are yet to deliver the product.<\/p>\n

    The next step is to fill in the balance sheet. Once you have actually earned the revenue, you can update the entry in the balance sheet to reflect that by reducing the liability and moving it to an income statement.<\/p>\n","protected":false},"excerpt":{"rendered":"

    What is deferred revenue? Deferred revenue refers to a payment that a company has received for goods or services that it hasn\u2019t yet delivered. The term is used in accrual counting, in which income is only recorded once it is earned, i.e. the product or service has been completed or delivered. Until that happens, deferred […]<\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false},"categories":[11],"tags":[],"yoast_head":"\nUnderstanding Deferred Revenue: Accrual Accounting Explained<\/title>\n<meta name=\"description\" content=\"Learn about deferred revenue, a concept in accrual accounting where a company receives payment for goods or services not yet delivered.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.zoomshift.com\/blog\/deferred-revenue\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Understanding Deferred Revenue: Accrual Accounting Explained\" \/>\n<meta property=\"og:description\" content=\"Learn about deferred revenue, a concept in accrual accounting where a company receives payment for goods or services not yet delivered.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.zoomshift.com\/blog\/deferred-revenue\/\" \/>\n<meta property=\"og:site_name\" content=\"Zoomshift\" \/>\n<meta property=\"article:published_time\" content=\"2026-02-15T06:42:40+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-03-29T11:21:08+00:00\" \/>\n<meta name=\"author\" content=\"ZoomShift\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"ZoomShift\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/deferred-revenue\/\",\"url\":\"https:\/\/www.zoomshift.com\/blog\/deferred-revenue\/\",\"name\":\"Understanding Deferred Revenue: Accrual Accounting Explained\",\"isPartOf\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#website\"},\"datePublished\":\"2026-02-15T06:42:40+00:00\",\"dateModified\":\"2026-03-29T11:21:08+00:00\",\"author\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/9ba35c556ffdf9d8dab06992b17a4b0d\"},\"description\":\"Learn about deferred revenue, a concept in accrual accounting where a company receives payment for goods or services not yet delivered.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/deferred-revenue\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.zoomshift.com\/blog\/deferred-revenue\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/deferred-revenue\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.zoomshift.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Deferred Revenue\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#website\",\"url\":\"https:\/\/www.zoomshift.com\/blog\/\",\"name\":\"Zoomshift\",\"description\":\"SMB Management Blog\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.zoomshift.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/9ba35c556ffdf9d8dab06992b17a4b0d\",\"name\":\"ZoomShift\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/05af010fb3485fa8095793cfff89a5e6?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/05af010fb3485fa8095793cfff89a5e6?s=96&d=mm&r=g\",\"caption\":\"ZoomShift\"},\"description\":\"The leading scheduling software designed for hourly employees. 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