What is Deferred Revenue?
Deferred revenue is revenue you have received payment for but can not be realized. Think of it as pre-payment for goods or services that a company is expected to provide to the purchaser at a later time. Deferred revenue is also called unearned revenue because, as the name states, it has not been earned yet.
Accounting for Deferred Revenue
In accounting, a “Deferred Revenue” liability account is used to track deferred revenue for services that have been sold but not yet performed. At the time of sale, the Deferred Revenue account will be credited (increased). Over time, usually monthly, your deferred revenue will be debited (decreased) and your earned revenue will be credited (increased). More on how to calculate deferred revenue
What is Unearned Revenue?
Unearned revenue is another term that can be used interchangeably with deferred revenue. It is simple revenue that has been collected but not yet provided.
Deferred Revenue Accounting in QuickBooks
ProRata simplifies the manual and sometime inaccurate procedures that are needed to track deferred or unearned revenue in QuickBooks. ProRata automates the process and makes it simple enough that someone without an accounting background can do it. ProRata works in conjunction with QuickBooks to manage deferred revenue journal entries.