Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. How does a company account for cash payments received in advance of delivering its goods or services? Under the "accrual-basis accounting" rules used by most companies, advance payments can't be counted as revenue because the company hasn't "earned" the money yet by delivering the goods or services.

But the cash has to be accounted for somewhere in the company's financial statements. Until it's earned, that cash is known as deferred revenue.

It's accounted for on both the company's balance sheet and its cash flow statement -- but the entry on the cash flow statement might not be obvious. How deferred revenue is calculated Imagine that it's Oct.

The gym's fiscal year ends on Dec. It's an asset, because it's cash. But in a sense, it's also a liability, because the gym owes you nine months of services in order to earn that cash. We refer to it as deferred revenue -- cash that the business has not yet earned but is committed to earning as revenue in the future. How deferred revenue is reported on the cash flow statement The cash flow statement tracks the cash coming into and going out of the company over the period.

But that cash might not necessarily show up as "deferred revenue" on the cash flow statement. Some accountants will make a specific entry for "cash received as deferred revenue" or something similar.

Accounting: Cash Flow Statement

But many will just roll that payment into a catch-all for cash received from operating activities, perhaps with a title like "Other cash from operations. This article is part of The Motley Fool's Knowledge Center, which was created based on the world of tanks best money making premium tank wisdom of a fantastic community of unearned revenue on cash flow statement. We'd love to hear your questions, thoughts, and opinions on the Knowledge Center in general or this page in particular.

Your input will help us help the world invest, better! Thanks -- and Fool on!

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we exchange rate in karachi dollar believe that considering a diverse range of insights makes us better investors.

The Motley Fool has a disclosure policy. Skip to main content The Motley Fool Fool.

Does Deferred Revenue Go on the Cash Flow Statement? | Your Business

Premium Advice Help Fool Answers Contact Us Login. Latest Stock Picks Stocks Premium Services. Stock Advisor Flagship service. Rule Breakers High-growth stocks. Income Investor Dividend stocks.

Does Unearned Revenue Affect the Statement of Cash Flows? | eHow

Hidden Gems Small-cap stocks. Inside Value Undervalued stocks. Learn How to Invest.

Credit Cards Best Credit Cards of Best Credit Card Sign-Up Bonuses Best Balance-Transfer Credit Cards Best Travel Credit Cards Best Cash-Back Credit Cards Best No-Annual-Fee Credit Cards Best Small Business Credit Cards.

Mortgages Compare Mortgage Rates Get Pre-Approved How Much House Can I Afford? Taxes How to Reduce Your Taxes Deductions Even Pros Overlook Audit-Proof Your Tax Return What Info Should I Keep?

Helping the World Invest — Better. How to Invest Learn How to Invest. Personal Finance Credit Cards Best Credit Cards of Best Credit Card Sign-Up Bonuses Best Balance-Transfer Credit Cards Best Travel Credit Cards Best Cash-Back Credit Cards Best No-Annual-Fee Credit Cards Best Small Business Credit Cards. Does Deferred Revenue Go on the Cash Flow Statement? Where does it show up on the company's financial statements?

How to Invest in Stocks. Prev 1 2 3 4 Next.