In some cases, customers may pay before the unit provides a good or service for them; however, revenue should only be recorded in period when it is earned. Deposits (whether refundable or non-refundable) and early or pre-payments should not be recognized as revenue until the revenue-producing event has occurred.
The cash given to the unit is a liability because it represents an obligation the unit has to provide the good or service (and justify receiving the cash). When this occurs, deferred revenue or a deposit should be recorded.
DR Cash (system generated entry on object code 1000)
CR Deferred Revenue or Deposit
|Object Code||Object Code Name||Description|
|2240||Deferred Revenues||Advance payments or unearned revenue. Revenue that is received but not earned in the current fiscal period.
Use: Summer sessions; tuition is collected for the summer but not earned until the expense is recognized in a following period.
|2250||Deferred Deposit||Deposits received but not used in the current fiscal period.
Use: Deposits collected for hosted events for catering, space, etc. Cornell Cooperative Ext. deposits from counties.
Deferred revenue is very similar to deposits, and have sometimes been used interchangeably. Typically, they differ in that deferred revenue reflects a payment prior to when the revenue is actually earned, whereas a deposit is a payment that may be returned to the customer if the good or service is not provided.
Note: Revenue related to gifts or contributions should be accrued only by university gift accounting staff (not by individual units).
When the unit fulfills its obligation, the revenue is earned and can be recognized. To record the transition from deferred revenue to revenue:
DR Deferred Revenue or Deposit
341 Pine Tree Road, East Hill Plaza
Ithaca, NY 14850
|Accounting:||7:30 a.m. - 4:30 p.m., Monday - Friday|
|Payroll:||7:30 a.m. - 5:00 p.m., Monday - Friday|