some people often have difficulty understanding the concept of Deferred Revenues. Deferred Revenues occur when someone...

some people often have difficulty understanding the concept of Deferred Revenues. Deferred Revenues occur when someone pays you to provide a service or good ahead of time. Since you haven’t earned the money yet, you record it as Unearned Revenue, a liability. Once the revenue is ‘earned’ you write-off the liability and recognize revenue. Are there any moral issues involved in accepting money before it is earned? What happens if you fail to provide the service or good to the customer as agreed upon?

What are your thoughts on this from a Christian perspective? cite

Expert Solution

Deferred Revenue arises when the supplier is paid entire money for the services to be provided during a period of more than one year. It occurs due to matching concept. Revenue should only be booked when the services are actually rendered or provided although you had received the advance money for the same.

Consideration of moral issues is qualitative aspect and accounting is based on quantitaive aspect. Although, there will be no conflict of moral issues. As one received the advance for the service to be rendered in more than one year time will create a Contractual Liability on the service provider and creation of Contractual right to receive service by service receipent.

As it creates a contractual liability on the service provider, if the service provider fails to provide the service to the receipent, the recepient will be entitled to receive back its advance money from service provider alongwith interest. So in no case the rights of the service receipent would be affected.

Please clarify more on about Christian Perspective. As caste based perspective does not change the general principles of accounting.

ekkarill92 answered 2 years ago

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