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Level 1

How does quick books handle deferred revenue and subsequent earned revenue in cash flow statement

 
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How does quick books handle deferred revenue and subsequent earned revenue in cash flow statement

Let's set up everything related to deferred revenue and cash flow in QuickBooks Online, lenw1.

 

Deferred revenue is usually handled using a journal entry in QuickBooks Online. Before that, we'll have to set up the deferred income as a liability account.

  1. Click Accounting on the left menu and go to the Chart of Accounts tab.
  2. Click the New button and select liability in the Account Type and Detail Type.
    You can ask your accountant if you're unsure what to select.
  3. Enter the Name and click Save and Close.

You can use this link for reference: Add an account to your chart of accounts in QuickBooks Online.

 

After that, we can already create a journal entry. I'd recommend reaching out to your accountant first to determine if this process suits your business setup.

  1. Click the + New button in the upper-left corner and select Journal entry.
  2. Debit the income account for the total deferred  amount.
  3. Credit the deferred account (liability account) and associate a customer name.
  4. Credit the deferred account again and associate a different customer name.
  5. Click Save and Close.

Once you've entered the necessary transactions, you can already pull up a cash flow report that you can customize.

  1. Select Reports on the left menu and go to the Standard tab.
  2. From the Business Overview section, select Statement of Cash Flows.
  3. Set the date range of the report.
  4. Expand the Rows/Columns section, select All Rows and Columns.
  5. Click the Run Report button.

Also, you can create your own statement of cash flows that will suit your business needs. You can download your Profit and Loss report. Then, use the data from filling in the cash flow statement template.  Here's how:

  1. Go to Reports.
  2. Choose Profit and Loss.
  3. From the Report period ▼ drop-down, select Since 90 days ago
  4. Select Run report.

You can refer to these articles for more detailed instructions:

Again, it is always best to consult an accounting professional when creating journal entries and accounts. They can give you the best option suitable to your business.

 

We'll be right here if  you need anything else regarding the cash flow and deferred revenue.

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