Is deferred income an asset or liability?

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How would you define deferred income and how is the deferred income recorded in the accounts of a company? In addition, is deferred income an asset or a liability? What is the difference between deferred income and accrued income?

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score 0 · Answer 1 · 2012-12-02T16:24:03+00:00

Deferred income is income that has been received but it relates to a later period. It is recorded as a liability. In simpler words, you have received money but you have yet to deliver the goods or provide the service. So, one part of the transaction is complete (the payment) but you still need to complete the second part (the delivery of the goods/services) which is effectively a liability.