Unearned Revenue

Unearned Revenue
When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can be thought of as a "pre-payment" for goods or services which a person or company is expected to produce to the purchaser. As a result of this prepayment, the seller now has a liability equal to the revenue earned until deliver of the good or service.

From an accounting perspective, unearned revenue is a double-edged sword. The early cash flow to the firm is advantageous for any number of activities, such as paying interest on debt to purchasing more inventory. However, by accepting unearned revenue, the firm has then entered a legal obligation to deliver on the terms of the payment. For example, with a prepayment on a lease contract, the revenue is a liability until it has been earned.


Investment dictionary. . 2012.

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  • unearned revenue — Revenue not yet earned in a *financial reporting period, but for which cash has already been received. In line with the *accruals basis of accounting, unearned revenue is recorded in *current or *long term deferred revenue accounts (classified… …   Auditor's dictionary

  • unearned revenue — unearned income ( revenue) Income received in advance of the time at which it is earned, such as prepaid rent. Bloomberg Financial Dictionary …   Financial and business terms

  • unearned revenue — noun 1. personal income that you did not earn (e.g., dividends or interest or rent income) • Syn: ↑unearned income • Topics: ↑tax, ↑taxation, ↑revenue enhancement • Hypernyms: ↑ …   Useful english dictionary

  • unearned income — noun 1. personal income that you did not earn (e.g., dividends or interest or rent income) • Syn: ↑unearned revenue • Topics: ↑tax, ↑taxation, ↑revenue enhancement • Hypernyms: ↑ …   Useful english dictionary

  • revenue enhancement — noun charge against a citizen s person or property or activity for the support of government • Syn: ↑tax, ↑taxation • Derivationally related forms: ↑tax (for: ↑taxation), ↑tax (for: ↑ …   Useful english dictionary

  • unearned income — An alternative term for *unearned revenue …   Auditor's dictionary

  • unearned income — ( revenue) Income received in advance of the time at which it is earned, such as prepaid rent. Bloomberg Financial Dictionary * * * unearned income unearned income ➔ income * * * unearned income UK US noun [U] (also investment income) …   Financial and business terms

  • unearned finance revenue — neuždirbtos nuomos pajamos statusas Aprobuotas sritis buhalterinė apskaita ir finansinė atskaitomybė apibrėžtis Nuomos sutartyje numatyta gauti, bet dėl nesuėjusio mokėjimo termino dar negauta palūkanų dalis. Jei nuomos sutartyje palūkanos nėra… …   Lithuanian dictionary (lietuvių žodynas)

  • revenue — Synonyms and related words: avails, box office, commissions, credit, credits, disposable income, dividend, dividends, earned income, earnings, gain, gains, gate, gate receipts, get, gross, gross income, gross receipts, income, intake, interest,… …   Moby Thesaurus

  • deferred revenue — An alternative term for *unearned revenue …   Auditor's dictionary

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