Answer: True .
Step-by-step explanation:
In accrual accounting, revenue is entered when it is earned and expenses are entered when they are incurred.
Deferred revenue is money received by a company in advance of having earned it. In other words, deferred revenues are not yet revenues and therefore cannot yet be reported on the income statement.
As a result, the unearned amount must be deferred to the company's balance sheet where it will be reported as a liability.
When your company receives a customer deposit or prepayment on a sale, that payment occurs in advance of the actual sale and is therefore considered unearned revenue. Deferred revenue flows between the balance sheet and the income statement as revenue.