Definition

Deferred revenue is money received from a customer in advance. The company owes customer goods or services.

Deferred expense is money your company has paid but not yet consumed.

Hence it is recognized as an asset.
(Defer means to postpone or put off to a later period)

1. Create an account. E.g.: 411 Rent prepayment, prepayment type.
   
   
   
2. Create a deferred expense model called: Rent yearly
   
3. Account setup > setup automation with a deferred expense: Create in the draft and select deferred expense model
   

Create a bill with a Rent prepayment account of $1200 (9/1/2023)

Client paid on 9/1/2023 $1200

From the rent prepayment account, Odoo creates a deferred expense model with 12 journal entries.

Those 12 draft entries are the same as below:

After the 12 entries are posted, the rent prepayment account credit of $1200 and offset the original bill debit of $1200.


The 12 entries posted date would be 9/30, 10/31, 11/30…till 8/31/2024

6. The impact on the financial report:

Balance sheet 9/30/2023
Bank credit of $1200 as we paid on 9/1/2023.
Prepayment debit $1100 (9/1 debit $1200, 9/30 credit $100)

P&L 9/30/2023
Rent expense debit $100


7. Extra information:

https://www.odoo.com/documentation/16.0/applications/finance/accounting/vendor_bills/deferred_expenses.html#automate-the-deferred-expenses