# Deferred revenue, rolled forward

> 2400 Deferred revenue through October: what came in, what was earned, what is still owed, and what billing up front does to it.

Source: https://lopifi.com/learn/revenue-recognition-and-deferred-revenue/deferred-revenue-roll-forward
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**How do you roll forward deferred revenue?** 2400 Deferred revenue through October: what came in, what was earned, what is still owed, and what billing up front does to it.

| 2400 Deferred revenue | October |
| --- | --- |
| Opening balance, October 1 — September's deposit (JE-12) | 3,000 |
| Billed ahead of service — the servicing (OCT-2) | 1,500 |
| Earned on delivery — the deposit order (OCT-3) | (3,000) |
| Earned over time — October's servicing (OCT-11) | (125) |
| Closing balance, October 31 | 1,375 |

2400 Deferred revenue for October. Every movement named, closing to the balance the ledger shows.

*[Figure: deferred revenue]*

The servicing, released from the liability month by month: $1,500 over twelve months from October 2026.

The $1,375 left at October 31 is servicing Northwind has been paid for and still owes. Contracted work not yet done is what a company calls its [remaining performance obligations](https://lopifi.com/md/glossary/remaining-performance-obligations). Here they equal the deferred balance, because the whole contract was billed up front; on a contract billed monthly they would be larger than it.

**Bill the year up front**
- Pro: Cash arrives on day one
- Pro: One invoice to chase instead of twelve
- Con: A large deferred revenue balance to roll forward every month
- Con: A refund to owe if the customer cancels
- Best for: A seller that needs the cash now and can carry the liability

**Bill monthly as delivered**
- Pro: Revenue, invoice and cash land in the same month
- Pro: Little or no deferred revenue to track
- Con: Twelve invoices, and twelve chances to be paid late
- Con: Less cash up front
- Best for: A customer that won't prepay, or a service still being proven

Two ways a business can bill the same year of servicing. The revenue is identical; the balance sheet and the cash are not.

## Where this page's rules come from

- [ASC 606-10-45-2](https://asc.fasb.org/606/tableOfContent) — Deferred revenue is a contract liability (codification)

## Read further

- https://lopifi.com/md/journal-entries/deferred-revenue
- https://lopifi.com/md/journal-entries/customer-deposit
- https://lopifi.com/md/differences/deferred-revenue-vs-accrued-revenue
- https://lopifi.com/md/startups/deferred-revenue-for-saas
- https://lopifi.com/md/accounting/deferred-revenue

- **Track:** [Accounting](https://lopifi.com/md/learn/accounting)
- **Part of:** [Revenue recognition and deferred revenue](https://lopifi.com/md/learn/revenue-recognition-and-deferred-revenue) — 4 min
- **Terms taught:** [Deferred revenue](https://lopifi.com/md/glossary/deferred-revenue), [Roll-forward](https://lopifi.com/md/glossary/roll-forward), [Remaining performance obligations](https://lopifi.com/md/glossary/remaining-performance-obligations)
- **Previous:** [Revenue recognition and deferred revenue](https://lopifi.com/md/learn/revenue-recognition-and-deferred-revenue)
- **Next:** [Prepaid and accrual schedules, Accounting · Lesson 15](https://lopifi.com/md/learn/prepaid-and-accrual-schedules)
- **The course:** https://lopifi.com/md/learn