Deferred income
Deferred income is consideration received or recorded before the related income is earned under the applicable recognition rules. It represents an obligation until the entity provides the goods or services. The company recognises 300 for the three months supplied, assuming the service is provided evenly, and recognises the remaining 900 as the service is delivered.
Worked example
A company receives 1,200 for a year’s service and has provided three months at year end; 900 remains deferred.
Common mistake
Recognising the full receipt as current-period revenue solely because cash arrived.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: income received in advance, unearned income