Revenue: Deferred v. Temporarily Restricted

An accounting issue that commonly plagues not-for-profit organizations is the proper recording of revenue that is received for a specific purpose. There are two ways to record this type of revenue, either as deferred or temporarily restricted, but the decision can cause much confusion.

While there are many factors that go into determining which is the appropriate method, the most important factor is to determine the type of revenue source. Is the revenue received in an exchange transaction,