Which of the following properly describes a deferral?
A) Cash is received after revenue is recognized.
B) Cash is received before revenue is recognized.
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

A deferral occurs when cash is received before revenue is recognized. This means that the cash has been collected but the corresponding revenue has not yet been earned. The revenue will be recognized at a later date, typically when the goods or services have been provided to the customer.

Which of the Following Properly Describes a Deferral