⚠️ Important Note: The methodologies described in this article are suggestions only and are not intended as formal accounting or legal advice. Please consult your accountant or financial advisor to determine the approach that is right for your organization.
📝 Overview
Revenue deferral is an accrual accounting practice used to ensure that income is recognized in the period it is earned, not simply when payment is collected. For organizations that collect fees in advance for programs like camps, classes, memberships, and leagues, properly deferring and recognizing revenue helps maintain accurate financial statements and comply with Generally Accepted Accounting Principles (GAAP).
This article outlines a suggested deferral methodology for each major program type available in your system.
🏕️ Camps/Per-Session
Use the process below to defer and recognize camp or per-session revenue on a monthly basis.
Click the arrow to learn more about suggested camp/per-session revenue deferral
Click the arrow to learn more about suggested camp/per-session revenue deferral
The simplest way to make accrual adjustments for camp or per-session revenue is to follow these steps:
When recording your camp sales through your GL Report entry, record all camp sales in your Deferred Camp Revenue account.
Open each camp that takes place in the current month.
Click Pay History to view the total payments made for that camp.
Add up all of the current month's Pay History totals.
Record this amount as revenue for the month using the journal entry below.
DR: Deferred Camp Revenue
CR: Camp Revenue
You will not need to reverse this entry. At the end of the camp season, your Deferred Camp Revenue account should have a balance of zero, as all camps will have taken place. If a balance remains, it will likely be small. Simply make the same entry above to bring the balance to zero, keeping in mind the entry may need to be opposite if the remaining balance in the Deferred Camp Revenue account is negative at the end of the camp season.
🧠 Example: If you have four weeks of camp in July, list the total Pay History amount for each camp, total them for the month, and record that as Camp Revenue for July.
Camp | Pay History |
July Camp – Week 1 | $5,000 |
July Camp – Week 2 | $7,000 |
July Camp – Week 3 | $6,000 |
July Camp – Week 4 | $4,000 |
Total Camp Revenue for July | $20,000 |
The journal entry would be:
DR: Deferred Camp Revenue $20,000
CR: Camp Revenue $20,000
📚 Classes
Use the process below to defer and recognize class revenue across a multi-month session.
Click the arrow to learn more about suggested class revenue deferral
Click the arrow to learn more about suggested class revenue deferral
For class sessions that span multiple months, recognize revenue on a pro-rata basis according to the number of class weeks in each month.
🧠 Example: Your Fall Session (September to November) is 12 weeks. You collect $120,000 for the session, with 3 weeks in September, 5 in October, and 4 in November.
At the end of September, you still owe your customers 9 classes. Your Deferred Class Revenue liability account balance should be:
9/12 × $120,000 = $90,000
Journal entry as of September 30:
DR: Class Revenue $90,000
CR: Deferred Class Revenue $90,000
On October 1, reverse this entry, as you will be recalculating at the end of the month:
DR: Deferred Class Revenue $90,000
CR: Class Revenue $90,000
At the end of October, you still owe customers the 4 classes in November:
4/12 × $120,000 = $40,000
Journal entry as of October 31:
DR: Class Revenue $40,000
CR: Deferred Class Revenue $40,000
On November 1, reverse again:
DR: Deferred Class Revenue $40,000
CR: Class Revenue $40,000
✍️ Note: In some cases, you may have collected fees for a future session while a class or two remains in the current session. We recommend making a separate entry for each session to keep your records clear. For the future session, defer 100% of fees already collected. In most cases, class fees collected in the month before a session begins apply almost entirely to the upcoming session. You may find it simplest to defer 100% of those amounts rather than calculating a split.
🏆 Teams
Use the process below to defer and recognize team/league revenue across a multi-month season.
Click the arrow to learn more about suggested team revenue deferral
Click the arrow to learn more about suggested team revenue deferral
For league seasons that span multiple months, recognize revenue on a pro-rata basis according to the number of weeks played in each month.
🧠 Example: Your Fall Season (September to October) is 8 weeks. You collect $80,000 for the season, with 3 weeks in September and 5 in October.
At the end of September, you still owe your customers 5 games. Your Deferred Team Revenue liability account balance should be:
5/8 × $80,000 = $50,000
Journal entry as of September 30:
DR: League Revenue $50,000
CR: Deferred Team Revenue $50,000
On October 1, reverse this entry, as you will be recalculating at the end of the month:
DR: Deferred Team Revenue $50,000
CR: League Revenue $50,000
✍️ Note: In some cases, you may have collected fees for a future season while one or two games remain in the current season. We recommend making a separate entry for each season to keep things clear. The first entry follows the example above. The second defers 100% of future season fees already collected. To find that amount, run the Team AR Report for the upcoming season, filtered to show only transactions that occurred on or before the end of the current month.
🪪 Memberships
Use the process below to defer and recognize membership revenue over the term of each membership.
Click the arrow to learn more about suggested membership revenue deferral
Click the arrow to learn more about suggested membership revenue deferral
According to Generally Accepted Accounting Principles (GAAP), membership revenue should be deferred and recognized over the full term of the membership rather than recorded all at once when collected. For example, a 12-month membership sold for $36 should generate $3 of recognized revenue each month, with the remaining balance held in a Deferred Membership Revenue liability account on your balance sheet.
The most efficient way to manage this is to group membership sales by month and create one recurring entry per group. Most accounting systems support recurring entries, which makes this straightforward over time.
Follow these steps:
When recording your GL Report entry each month, book all membership sales to the Deferred Membership Revenue account.
Total membership sales for the month, grouped by membership term length.
Divide each group's total by the number of months in that membership term.
Record the resulting monthly amount as revenue for the current month.
Set that monthly entry to recur automatically for the full duration of the membership term.