Accounting for deferred revenue presents unique challenges for performing arts venues and companies.
What is deferred revenue?
Under the accrual method of accounting, revenues must be recorded when they are earned, regardless of when money changes hands. If a customer pays for a service in advance, the money is not treated as revenue until the service is provided. Instead, that transaction is recorded in a liability account (commonly called deferred revenues or unearned revenues) until it has been earned and can be moved to a normal revenue account.