What Is Deferred Income?

Deferred income refers to income or income that has yet to be confirmed. It can also be said to be temporarily unrecognized income. It is the application of accrual basis in the recognition of income, which is equivalent to the receipt of accounts in advance.

Deferred income

Deferred income refers to the receipt of monetary funds in advance and the recognition of income items in subsequent accounting periods. ^[1]

Revenue is not recognized when cash is received in advance, but liabilities (such as "accounts received in advance") are recognized; then revenue is recognized when goods or services are provided in subsequent accounting periods, and the aforementioned decrease in liabilities is also recognized. ^[1]

The deferred income items include rents of rented packing materials received in advance, rented houses and equipment rented in advance. ^[1]