Deferred Revenue and Prepaid Expenses

Deferred revenue and prepaid expenses let you recognise income and costs in the periods they actually relate to — not all at once when the cash moves. This keeps your monthly profit accurate for subscriptions, annual contracts, advance rent, insurance, and similar arrangements.

When to use it

• Deferred revenue: You were paid up front for something you will deliver over time (for example, a one-year service contract). The income is released to your P&L month by month.
• Prepaid expense: You paid up front for something you will use over time (for example, a year of insurance). The cost is recognised month by month.

How it works — step by step

1. Create a schedule: Under Accounting → Deferred Schedules, enter the total amount, the number of periods, and the start date.
2. Udyot splits it evenly across the periods, with any rounding absorbed in the final period so the schedule reconciles to the paisa.
3. Automatic recognition: Each period, Udyot posts the journal that releases revenue (or recognises the expense) — automatically, on schedule.
4. Cancel if needed: Cancelling a schedule stops future recognition.

Tips & common questions

Do I post the monthly entries myself? No — once a schedule exists, Udyot recognises each due period for you on a nightly run.

Related: Recording Vouchers, Closing the Financial Year.