Deferred revenue is recorded as a liability on the balance sheet of a company. Hence, the deferred revenue journal entry will be treated as a liability which will be a credit entry. The deferred revenue journal entry is treated as a liability because the revenue has not been earned and represents something that the company owes to a customer. As the prepaid product or service is delivered to the customer over time, the deferred revenue is then recognized as revenue and reported on the income statement in accordance with the GAAP matching principle. Hence, the deferred revenue adjusting entry will be a debit entry to reduce the deferred revenue account.