Deferred revenue is initially recorded as:
A) revenue but becomes a liability over time.
B) an asset but becomes revenue over time.
C) a liability but becomes revenue over time.
D) revenue but becomes an asset over time.

Question

Quizplus · Accepted Answer

Deferred revenue is money received by a company for goods or services not yet delivered. At the time of receipt, it is recorded as a liability because the company owes the customer the product or service. As the company provides the goods or services, the deferred revenue is recognized as revenue on the company's income statement. Hence, option C is correct.

Deferred Revenue Is Initially Recorded As