Question

The deferred revenue account typically has which type of normal balance?

Question 9 options:

a. Debit

b. Credit

c. No balance

d. Deferred

Answer 1

Answer:

b. Credit

Explanation:

Deferred revenue represents the revenue not earned, basically any advance payments received from customers, for which no goods are supplied or no services are provided yet.

Accordingly the company stands liable for such amount and shall repay in terms of goods or services, meanwhile this is shown as a liability in the balance sheet.

As liabilities has credit balance, deferred revenue also has credit balance.