A deferral

Question

A deferral

Quizplus · Accepted Answer

Companies use deferrals to recognize expenses in the period they are incurred regardless of when cash is paid. For example, a company could pay $1,200 for the right to use office space in the future. In this case, the company would defer the expense recognition by recording the cost (cash payment) in an asset account. Then the expense would be recognized later in the period in which the office space is used to generate revenue. In summary, a deferred expense occurs when a company pays cash before recognizing the associated expense.

A Deferral