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The cash flow statement's operation part includes a reflection of the cash flow impact of changes in deferred revenue. A cash influx occurs when deferred revenue rises (from $500 to $1,000), but a cash outflow occurs when deferred revenue falls.
Where is deferred revenue recorded on cash flow statement?
Deferred revenue is shown as a liability on the balance sheet rather than as profit on the income statement since it has not yet been realized. That money is referred to as deferred revenue up until it is earned. Both the company's balance sheet and cash flow statement account for it, however the cash flow statement item may not be immediately clear.
On the balance sheet, deferred revenue is shown as a liability, while the amount received increases the cash (asset) account. Once the income is earned, the liabilities account is decreased and the revenue account is raised on the income statement.
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