QUESTION 14 OF 25

What is deferred revenue?

This question tests your ability to explain a basic concept of accounting. Under the accrual method of accounting, deferred revenue arises when cash is received before revenue is earned. This most commonly occurs when a customer prepays for a good or service.

"Deferred revenue is a liability that arises when cash is received before revenue is earned. This typically occurs when a customer pays before a service is performed or goods are delivered. That liability is then reversed in the period the revenue is earned."

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Entry Level Accountant Mock Interview

What is deferred revenue?

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25 Entry Level Accountant Interview Questions & Answers