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Deferred revenue refers to payments received in advance for services/goods which have not yet been performed or delivered. It is classified on the company's balance sheet as a liability and not as an asset.
Receiveable is an asset on the company's balance sheet which will be collected in cash or cheque in the up comming days.
Deferred revenue is recorded as a credit to the balance sheet and represents a liability because it is unearned revenue. So a customer may have paid in advance for a service or product that has not yet been delivered.
Accounts receivable is an asset in the balance sheet. It is initially recorded as a debit to AR and Credit to Sales (P&L), it is assumed a sale has been made that has not been paid. Once payment is received by the customer the second double entry is to debit Cash/Bank , credit AR.
Deffered Revenue is Un Earned Revenue & is considered as liability, became part of Balance Sheet .In Construction Business it is given in the form of Mobilization Advance. Account Receavble is generated by Earned Revenue & is part of Profit & Loss but Receavble is current Asset & is treated in balanse Sheet Item.
Simply put, deferred revenue is revenue that an entity has received but yet to render the services to earn such money. For example, in utility sector, consumer pre-paid for services such as telecommunication, electricity but gradually utilised such payment as they consume the services. Such revenue is deferred revenue to the provider of the services and hence should be recognised as a liability in the balance sheet at the year end. While accounts receivables are services or products an entity has sold and ownership has been transferred to the customer but the customer is yet to pay the entity. Accounts receivables is as a result of credit sells made by an organisation and shoul be recognised as an Assets in the Balance Sheet.
The different between the two concepts (deferred revenue and accounts receivables) is that the first is a liability against the entity while the later is an asset of the entity.
Accrued revenue is the revenue that a company has earned by delivering products or producting services but has not recieved in cash from customers.absent an estimate of any doubtful accounts.companies credit the total accured revenue to thw revenue account and report in the income statement,
Account recievable are a kind of current asset that companies expect to convert to cash in the near future
Deffered Revenue: Income received in advance from the customer (as per mutually agreed terms of the payment) against goods or services to be delivered in future, also known as "unearned income". It is a liability appearing on the Balance Sheet of the supplier (vendor/seller) until the delivery of the goods or services.
On the Profit & Loss Account, it does not appear until earned.
Prototype Accounting Entries:
At the time of receipt of an advance:
Cash / Bank Dr.
Deferred Revenue Cr.
At the time of Income earned (Delivery of Goods & Services)
Deferred Revenue Dr.
Income Cr.
Accounts Receivable: Services and goods sold on credit to the customer. It is classified as an asset appearing on the balance sheet of the supplier until payment is received from the customer.
On the Profit & Loss Account, it appears as credit sales.
Prototype Accounting Entries:
At the time of goods or services sold on credit
Accounts Receivable Dr.
Sales/Revenue Cr.
At the time of cash/cheque received from the customer
Cash/Bank Dr.
Accounts Receivable Cr.
Deferred revenue is not yet revenue. It is an amount that was received by a company in advance of earning it
Receivable is a current Assets / sales to be collected from customers / revenue recognized
Deffered revenue is called un earned revenue
Receivable; is receivable in cash or in kind to be value received
as advance // loan // Debtors ets Advances to contractor, vendor,staff etc
Deffered Revenue: Liability in Financial Position / Advances from Customer /Revenue is not recognized
Receivable balance: current Assets in Financial Position / to be collected from customers / revenue recognized
DEFERRED REVENUE
It refers to payments received in advance of services or goods that have not yet been delivered. (Unearned income)
ACCOUNT RECEIVABLE
it is an asset on the balance sheet until payment is received. It refers to current assets or sales to be collected in the near future that is services or products have been sold and now owned by the customer, but the customer is yet to make payment, ex goods or services sold on credit.
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