{"id":8681,"date":"2023-11-17T08:36:00","date_gmt":"2023-11-17T08:36:00","guid":{"rendered":"https:\/\/thewealthcircle.com\/?p=8681"},"modified":"2023-11-17T09:00:37","modified_gmt":"2023-11-17T09:00:37","slug":"what-is-unearned-revenue","status":"publish","type":"post","link":"https:\/\/kiiky.com\/wealth\/what-is-unearned-revenue\/","title":{"rendered":"What Is Unearned Revenue? How Does It Work?","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n
Being aware of your company’s financial techniques will help you have a better knowledge of its financial requirements. For this reason, we have put down all you need to know about Unearned revenue.<\/p>\n\n\n\n
This is especially useful if your company runs into financial difficulties that necessitate a thorough understanding of how to deal with them. <\/p>\n\n\n\n
Furthermore, as a business owner, unearned revenue is helpful to cash flow and advanced payments, retainers, and deposits are all different ways to collect a very important liability on your books<\/p>\n\n\n\n
Read on to find out what exactly unearned revenue is, how it works, benefits, etc.<\/p>\n\n\n\n\n\n
Unearned revenue or income, which is also known as deferred revenue, is money received by a corporation from a customer for products or services that will be given at a later date.<\/p>\n\n\n\n
The term comes from accrual accounting, which recognizes revenue only when a corporation receives cash AND the products or services have not yet been delivered to the consumer.<\/p>\n\n\n\n
Some examples of unearned revenue Includes:<\/strong><\/p>\n\n\n\n For example, a client pre-pays for a dog walking package. The plan includes three months of walking. The cost is $1200 per month at $400 per month. The client makes a one-time payment of $1200. The firm owner deducts $1200 from cash and credits $1200 from unearned earnings.<\/p>\n\n\n\n The business owner then decides to keep track of the accrued revenue on a monthly basis. Earned revenue is recorded in an accrual, which is a type of adjusting journal entry.<\/p>\n\n\n\n The owner deducts $400 in unearned income and credits $400 in revenue at the end of the month. <\/p>\n\n\n\n He continues to do so until the three months are up and he has accounted for the entire $1200 is generated and collected revenue.<\/p>\n\n\n\nImportance Of Unearned Revenue<\/strong><\/span><\/h3>\n\n\n\n