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What’s the difference between deferred revenue and accounts receivable?

What’s the difference between deferred revenue and accounts receivable?

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Answer #1

DEFERRED REVENUE

  • It is a revenue for a business which is not earned yet but is received in advance under the acrual basis of accounting.
  • Also known as unearned revenue.
  • It is a liability for the business.
  • It is consider in the balance sheet on liability side as deferred revenue.
  • It convert into actual revenue when the business or company gives the goods or services promised on behalf of that money.
  • for example. payment receive from customer for material such as goods.

ACCOUNT RECEIVABLES

  • These are the sales which will be collected in the future by the customers and their payments are still pending.
  • It is a current asset for the company.
  • It is included in balance sheet as the name accounts receivables.
  • It creates basically the creditors for the business from which payment will receive in near future.
  • for example, goods sold to Antonio on credit
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