How Is Deferred Revenue Connected to Accounts Rece
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How Is Deferred Revenue Connected to Accounts Receivable?
by Nicholas B. Sisson, Demand Media
A great irony of accounting on an accrual basis is that it lets companies report revenue that they do not have and actual cash that they have not earned. Accounts receivable and deferred revenue accounts convert to cash over time and represent how customers pay for different products and services. Companies and small businesses that use accrual accounting might be able to leverage both accounts for growth and income.