Unearned Revenue (Deferred Revenue)

1. Unearned revenue (revenue received in advance) is recorded as a liability because it is an obligation to perform a service in the future and is reported as revenue in the period in which it is earned, that is, when no further future service is required. Examples include rent received in advance, interest received in advance on notes receivable, and subscriptions received in advance. A liability that represents the amount of goods or services that a company owes its customers. The cash has been collected, but the revenue has not been earned.