Learn about the process of reclassifying contract liability, allocation adjustment liability, and cost-accrual accounts as long-term and short-term in Zuora Revenue.

The classification of assets and liabilities as short-term or long-term is crucial for accurate financial reporting and provides a clear picture of the company's financial obligations and their timelines to stakeholders.

In general, for Contract Liability, it is classified on the balance sheet as either short-term or long-term, depending on the period over which the goods or services are delivered

• Short-term Contract Liability: This refers to obligations that are expected to be fulfilled within a typical timeframe, usually one year. It's classified as a current liability on the balance sheet. For example, a monthly or annual software subscription, where the company owes the customer service for the duration of the subscription, typically less than a year, is considered short-term Contract Liability.

• Long-term Contract Liability: This refers to obligations that extend beyond one year. Multi-year software or service contracts paid upfront, for instance, would be classified as long-term deferred revenue.

Zuora Revenue offers a feature called LT/ST Reclass, which supports the reclassification of Contract Asset and Contract Liability account balances between short-term and long-term categories.