If someone pays up front for a service to be delivered over a period, you have a liability, no matter whether on a cash or accrual basis.
The difference is that you can recognize the revenue on receipt of the cash, but at the same time, you also recognize the liability to deliver the service (based on COGS etc for the liability).
The liability reduces as you expense (and actually pay on a cash basis) the cost of supplying the service.
At least that's my non-accountant idea of how it works.
The difference is that you can recognize the revenue on receipt of the cash, but at the same time, you also recognize the liability to deliver the service (based on COGS etc for the liability).
The liability reduces as you expense (and actually pay on a cash basis) the cost of supplying the service.
At least that's my non-accountant idea of how it works.
I may be completely wrong.