What is the difference between deferred revenue and unearned revenue. Explain with an example.

Question

Accepted Answer

Deferred revenue and unearned revenue are the same thing. They refer to revenue received in advance of being earned.

Deferred revenue and unearned revenue are both liabilities on a company's balance sheet.
They represent revenue that has been received but not yet earned.
An example of deferred revenue is a subscription service that is paid for in advance.
An example of unearned revenue is a deposit received for a future service or product.
Deferred revenue is recognized as revenue over time as the service is provided.
Unearned revenue is recognized as revenue when the service or product is delivered.
Both deferred revenue and unearned revenue are important for accurate financial reporting.

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