Which of the following is not true about deferred revenue?
A) Deferred revenue with respect to gift cards is recognized as revenue when the gift cards expire.
B) Deferred revenue is a liability.
C) Deferred revenue is recognized on credit sales when collectibility can be estimated.
D) Customer prepayments typically require recognition of deferred revenue.

Question

Quizplus · Accepted Answer

Deferred revenue is recognized as revenue when the company has fulfilled its obligation to the customer, not based on the collectibility of credit sales. Collectibility affects the recognition of revenue for sales made on credit, not for deferred revenue, which is recognized when the service is provided or goods are delivered, regardless of payment terms.

Which of the Following Is Not True About Deferred Revenue