A company receives $100 in cash upfront for a subscription that will be delivered over 12 months. Walk through the accounting entries in month 1.

Answer

Upon receipt, at T0, no income is recorded on the income statement, $100 is recorded in your CFS under CFO for Deferred Revenue - assuming no other changes, your net change in cash is $100. Cash is debited for $100 on your balance sheet, and Deferred Revenue is credited for $100.