Accounting Dictionary - Letter D
refers to the recognition of revenues or expenses at some time after cash has been transferred. Examples of deferrals are unearned revenue (e.g., unearned service revenue) or prepaid expenses (e.g., prepaid rent expense). Deferrals represent a concept of accrual (accrual basis) accounting. Recognition of revenues or expenses related to deferrals is normally performed at the end of an accounting period by posting adjusting journal entries.
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