In the case of deferred revenue,the adjusting entry at the end of the period includes a credit to Service Revenue.Assume the deferred revenue is initially recorded as a liability.

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When deferred revenue is initially recorded as a liability, it means that the company has received payment for goods or services that have not yet been provided to the customer. As the goods or services are provided over time or at a later date, the liability is gradually reduced and the corresponding revenue is recognized. At the end of the period, an adjusting entry is made to reflect the amount of revenue that has been earned during that period. This entry includes a credit to Service Revenue, which increases the revenue account and ultimately reduces the liability account.

In the Case of Deferred Revenue,the Adjusting Entry at the End