Q: In the example with the $25,000 invoice, would accounts receivable only be removed once the actual service had been delivered, i.e., revenue recognized?
A: No. The accounts receivable amount would be removed, or credited, when the cash is received in 30 days. At this point, the product has not been delivered and revenue has not been recognized.
Revenue is recognized and increased, or credited, when product is delivered in 60 days. At the same time, deferred revenue is debited, or removed, as the product is delivered to the client and revenue recognized. This event has no impact on accounts receivable.
Course overview: Critical Accounting Principles and Assumptions and More Debits and Credits