Which of the following properly describes a deferral?
A) Cash is received after revenue is earned.
B) Cash is received before revenue is earned.
C) Cash is paid after expense is incurred.
D) Cash is paid in the same time period that an expense is incurred.

Question

Quizplus · Accepted Answer

Deferrals involve recognition of revenue or expenses in a period different from when the cash is exchanged. Specifically, when cash is received before the revenue is earned, it is considered a deferred revenue, which is a liability until the revenue is earned.

Which of the Following Properly Describes a Deferral