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when a company recognizes revenue on the income statement, what it also recognize on its balance...

when a company recognizes revenue on the income statement, what it also recognize on its balance sheet?are there a number of possibilities?

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Answer #1

As per my understanding of the question it is based on the concept of Defered revenue.

As per accrual accounting a company will recognize revenue as earned only when the money is received from the buyer and goods or services is actually delivered or provided.

However a company accrues Defered revenue when the amount is received in advance but the good or service is to be provided at a future date. Because of this the Defered revenue will be shown as a liability in the balance sheet and when the service is actually provided or goods are delivered then the Defered revenue will be debited and revenue will be recognized in income statement.

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