This month, a company receives $2,500 from a regular customer, of which $1,500 is for products delivered last month and $1,000 is for products that will be delivered next month. What is the net change in Deferred Revenue this month (assuming no other transactions affecting Deferred Revenue)?

Correct answer. Deferred Revenue is a liability account that should contain amounts received from customers in the form of cash for products that have not yet been delivered. The payment of $1,000 for products that will be delivered next month is recorded as an increase in Cash and a corresponding increase in Deferred Revenue.