If deferred revenue has been earned by the end of the current period and no adjustment is recorded,net income for the current period will be understated.

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Deferred revenue represents payments received in advance for goods or services that have not yet been provided. Once the goods or services have been provided, the revenue should be recognized and removed from the deferred revenue account. If this adjustment is not recorded, the revenue will not be reported in the current period's income statement, causing net income to be understated.

If Deferred Revenue Has Been Earned by the End of the Current