Fintech Lab
Lesson 10Accrual and engineering patternsIntermediate
Deferred revenue
Why annual subscriptions cannot all hit January's revenue.

A user pays you ₦12,000 in January for an annual subscription. Your instinct: book ₦12,000 of January revenue. Your accountant: 'no, you're fired.' Revenue is recognized when EARNED, not when CASH arrives. The other ₦11,000 sits in a liability called Deferred Revenue, you owe the user 11 months of service. Each month you 'earn' ₦1,000 and reclassify it from deferred to recognized.

Open this lesson
Share on LinkedIn Share on X

Fintech Lab is a free, interactive lab for fintech engineers. Real ledger, your own sandbox, engineering patterns from production. See all 85 lessons.

Search lessons

Type to find any of the 85 lessons. Press Enter to open.