Multiple Choice Question When does a company credit Deferred Revenue? When the cash is collected in advance When the cash is collected later When the cash is received at the same time the services/goods are delivered

A company credits Deferred Revenue when it collects cash in advance for goods or services that are yet to be delivered. This is important because it reflects the obligation the company has to provide those goods or services in the future. Until that obligation is fulfilled, the amount received is considered a liability on the balance sheet rather than revenue. This concept is not just for accounting classes; it's also vital in real-world businesses! Take a subscription service, for example. When you pay for a year's subscription upfront, the company records that as Deferred Revenue until they provide you with unlimited access throughout the year. It ensures that they account for the revenue accurately as they deliver their service over time.