Deferred revenue, also called unearned revenue, is revenue a business bills upfront for goods or services it hasn't delivered yet. It is a liability on the balance sheet that represents a prepayment (e.g., an annual membership bill). Deferred revenue is a core concept in accrual accounting, where revenue is recognized when the billed service is delivered to the customer (i.e., earned), not necessarily when payment is received. According to GAAP, revenue can only be recorded after it has been earned by fulfilling customer obligations.
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How To Filter The Advanced: Deferred & Recognized Revenue Report by Revenue Period:
Hover over the "Revenue Period" column header.
Click the three-dot menu (...) next to the column name.
Select Filter.
4. Choose between a rolling date range or a fixed date range. For example:
Select the rolling date range "Last 1 Month" to see last month's deferred & recognized revenue data.
Select the fixed date range "Between 04/01/2025 to 04/30/2025" to see April 2025's deferred & recognized revenue data.
Report Breakdown
The Advanced: Deferred & Recognized Revenue report breaks out each patient's most recent billed membership charge's recognized revenue and deferral outstanding amounts by month for the calendar year.
Column Data
Charge Total: The total billed amount for the membership charge - regardless of whether or not the charge was paid.
Transaction Date: The membership charge's bill date.
Deferral Outstanding: The total deferred amount for the membership charge within the revenue period.
Recognized Revenue: The total amount earned or accrued for the membership charge within the revenue period.
For charges with a service duration longer than one month, a portion of the deferral outstanding balance becomes recognized revenue each month. As such, a charge's deferral outstanding balance gradually reduces month over month as revenue is recognized.
Report Calculations Explained
Recognized & deferred revenue calculates revenue that is not recognized on the transaction date of the charge but is instead deferred across future months over a certain period of time. The calculation takes the most recent membership invoice for charges with a service duration of more than a month and allocates the revenue into monthly portions over the duration of the charge.
For example, a $1,200 annual membership billed on April 16th, 2025 will be split and recognized in the following months:
April 16th - 30th, 2025 (.5 month): $50
May 2020 - March 2026: $100 each month
April 1st - 15th, 2026 (.5 month): $50