Categories: General Tax Terms
Deferred Income refers to revenue that has been received but not yet earned, meaning the services or goods associated with that income have not yet been delivered or completed. This type of income is recorded as a liability on the balance sheet until the earning process is fulfilled.
For example, if a company receives payment for a subscription service for a year in advance, that payment is classified as Deferred Income. The company will recognize revenue monthly as the service is provided, thus reducing the deferred income liability over time.
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