What are Deferrals And Accruals
Deferrals means those Expenses which are paid by business but the benefit against these still not received during the Current Accounting Period or an Income which is received by the business but still it is not earned due to non delivering of goods or non rendering of services. Examples of Deferred Expenses are Prepaid Expenses or Prepayments e.g., Prepaid Rent Or Prepayment Rent . Deferred Income include Unearned Revenue . You Can Also Read Out, “ Deferred Expenses VS Prepaid Expenses ” Deferred Expenses are categorized as Current Assets on Balance Sheet as these have life within one year. These are also known as Advance Payments, Deferred Expenses, Expenses Paid In Advance, etc. Deferred Expenses Adjusting Journal Entry: There are two possibilities for Deferred Expenses relating to passing Adjusting Entries : 1. When Prepaid Expenses initially recorded as an Expense 2. When Prepaid Expenses initially recorded as a...