How is deferred revenue reflected on the cash flow statement?
Deferred revenue, also referred to as unearned revenue, is a liability (current or non-current) that is recorded when the company receives cash from customers but is not yet able to recognize the revenue. The cash flow impact from changes in deferred revenue is reflected in the operation section of the cash flow statement. When deferred revenue increases (i.e. $500 to $1,000), the increase results in a cash inflow, while a decrease results in a cash outflow.
You might also be interested in...
What are the three sections of the cash flow statement?
The three sections are operating, inventing, and financing. The phrase “Oops I forget” is helpful to remember the three section. The “O” in oops represents operating, the “I” represents investing, and the “f” in forget represents financing. The operating section of the statement of cash flows will represent the cash inflows and outflows from operating […]
What is reported in the investing section of the cash flow statement?
The investing section includes purchase (capital expenditures) or sale of fixed assets. It would include loans made to other entities to collect interest income. Includes the purchase or sale of available-for-sale and held-to-maturity securities (excludes trading securities). Any acquisition or sale of a business unit would be included in the investing section.