Booking of deferred revenue liabilities

In QuickBooks, you can book deferred revenue liabilities using journal entries to accurately account for income received in advance that you haven’t yet earned. Here’s how to do it:

1. Log in to QuickBooks: Open QuickBooks and log in to your company file.
2. Create a Journal Entry:
   • Go to the “Company” menu and select “Make General Journal Entries.”
3. Enter the Date:
   • In the “Date” field, specify the date of the journal entry.
4. Debit the Liability Account:
   • In the first line of the journal entry, debit an appropriate liability account, such as “Deferred Revenue” or “Unearned Income.” To do this:
     • In the “Account” column, select the liability account.
     • Enter the amount you received as deferred revenue.
     • If needed, include a memo or description to clarify the purpose of the entry.
5. Credit the Income Account:
   • In the second line of the journal entry, credit an income account that corresponds to the product or service related to the deferred revenue. This represents the revenue you’ll recognize when you fulfill the obligation. To do this:
     • In the “Account” column, select the income account.
     • Enter the same amount as the debit side, indicating the revenue you expect to earn.
     • Include a memo to provide context for the journal entry.
6. Save the Journal Entry:
   • Click “Save & Close” to record the journal entry.

This journal entry effectively records the deferred revenue liability on your balance sheet and recognizes the related income on your income statement when the revenue is earned. When you eventually deliver the product or service to your customer, you can create an invoice to recognize the revenue. As you earn the revenue, you will reduce the deferred revenue liability account accordingly.

Please consult with your accountant or financial advisor to ensure that your deferred revenue accounting aligns with your specific business practices and accounting standards.

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