What is deferred income balance at 30 June 2025?

• A. £4.3 million
• B. £4.0 million
• C. £3.5 million
• D. £4.8 million

Answer: (A)

Deferred income balance is the amount of money a company has received in advance from customers for goods or services that have not yet been provided. It sits as a liability until the performance obligation is fulfilled, at which point it becomes revenue.

To work out the balance on a specific date, think of it as a running total: start with the opening deferred income, add any cash received from customers for future work during the period, and subtract the revenue that is recognized during the period from items that were previously deferred. In formula form described in words: Closing deferred income = Opening balance + cash receipts for future performance - revenue recognized from previously deferred items. You may also need to adjust for refunds or reclassifications if applicable.

For example, suppose the opening deferred income is 4.0 million. During the period, 0.5 million is received in advance, and 0.2 million of previously deferred revenue is recognized as actual revenue. The closing balance would be 4.0 + 0.5 − 0.2 = 4.3 million. That shows how the 4.3 million figure can arise as the remaining liability at 30 June 2025, representing contracts or services not yet performed.

So if your data align with that pattern—opening balance, plus new advances, minus revenue recognized—you reach the 4.3 million figure as the deferred income balance.