Deferred revenues, or unearned revenue, are payments made in advance by customers for products yet to deliver or services yet to render. #odoo15videos
Such payments are a liability for the company that receives them since it still owes its customers these products or services. The company cannot report them on the current Profit and Loss statement, or Income Statement, since the payments will be effectively earned in the future.
These future revenues must be deferred on the company’s balance sheet until the moment in time they can be recognized, at once or over a defined period, on the Profit and Loss statement.#odoo15
For example, let’s say we sell a five-year extended warranty for $ 350. We have already received the money now but haven’t earned it yet. Therefore, we post this new income in a deferred revenue account and decide to recognize it on a yearly basis. Each year, for the next 5 years, $ 70 will be recognized as revenue. #odoo15fumctionalvideos
Odoo Accounting handles deferred revenues by spreading them in multiple entries that are automatically created in draft mode and then posted periodically.
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