We issue invoices relating to 12-month web hosting service. When we issue the invoice, we should record the entire amount of the invoice as DEFERRED REVENUE (ie. $10 x 12 mths = $120, balance sheet item). After the particular month of the hosting service, $10 of revenue has been earned and deferred revenue amount will be $110. We must keep adjusting the balance sheet and income statement over the course of the service until the company has fulfilled its obligation of services and the liability to the customer reaches zero. This would be exactly the same as when Zoho Corporation receives 12-month subscription from customers.

My concern is how do I add 'deferred income a/c (liability item)' in the 'ITEMS' since its corresponding accounts can only be income item (Profit and Loss item).

Can you guide me how to issue such invoices (deferred revenue) in Zoho? Furthermore, how to correctly record all the above transactions in Zoho?

Thank you in advance for your help.