Which of the following adjustments is an example of a deferral?
A) The recording of wages earned by employees but not yet paid
B) The recording of periodic depreciation expense on equipment
C) The recording of fees earned but not yet billed or received
D) The recording of interest income earned but not yet received
E) None of the above

Question

Quizplus · Accepted Answer

Deferrals involve either the postponement of the recognition of an expense that has been paid in advance or the delay in the recognition of revenue that has been received but not yet earned. Recording periodic depreciation expense on equipment is an example of a deferral because it allocates the cost of an asset over its useful life, rather than immediately expensing the cost when the asset is purchased.

Which of the Following Adjustments Is an Example of a Deferral