Deferred income

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Deferred income is income for which the sales transaction has been recognized by the company, but has yet to be earned. For example, a customer pays his/her annual software license upfront on the January 1. However the company financial year-end is May 31, the company would only be able to record five months of the income as turnover in the profit and loss account. The rest would be accrued in the balance sheet as a deferred creditor.

Deferred income is also sometimes referred to as Deferred Revenue

[edit] See also

Deferral

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