Deferred Revenue
Definition
Cash received from customers before the service or product has been delivered. Deferred revenue is a liability recorded on the balance sheet. It is recognised as revenue only in the period in which delivery occurs. Deferred revenue is not revenue at the point of receipt.
Common Misapplication
The most common misapplication is recording cash received from customers as revenue at the point of receipt, regardless of whether the service has been delivered. Annual subscription payments received in advance must be recorded as deferred revenue on the balance sheet and recognised as revenue monthly as the service is delivered.
FFI Standard Reference
This term is defined and applied in Book 1, Section 1.4: The Accounting Integrity Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Deferred Revenue. https://ffistandard.org/glossary/deferred-revenue/. 2026.