[Ray]

Hi all,

I have a general question. If there is a deferred revenue schedule and due to an accounting mistake revenue was over recognized. How can this be fixed? Need to remove this over recognition off the balance sheet.

Thanks,
Wiz

[Pete]

You would have to adjust the balance sheet to the schedule, after the adjustment. You would basically reverse the journal entry for deferred revenue, plugging it to the schedule.

You originally recorded a credit to some liability and a debit to some revenue to reverse the original revenue and make it deferred?

Don’t feel too bad. I have a year end negative AR balance and have the books locked for the audit.

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
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[CPA1219]

If it's in the current reporting period, simply make an adjusting journal entry to deferred revenue, thereby reducing revenue (debiting) by the over recognized amount, and adding back (crediting) to the respective liability account (i.e. un-earned billings, un-earned subscriptions, etc).

CPA, CIA, CFE, MBA, Big4 Alum, Private Industry (Financial Reporting & Internal Audit), Now Sole Practitioner.

 

[Ray]

thank you for the advice

[Ray]

thank you

[Author]

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