Which of the following transactions does not create a deferral?
A)Paying cash to purchase a three-month insurance policy.
B)Receiving cash from a customer for services to be provided in the future.
C)Paying cash to employees for wages they have earned.
D)Paying cash to purchase a two-month supply of office supplies.

Question

Quizplus · Accepted Answer

Paying cash to employees for wages they have earned is not a deferral transaction because it is a current expense and does not involve the prepayment or receipt of cash for services or goods to be received in the future. Choices A, B, and D involve prepayments or receipts of cash for goods or services that will be used or provided in future accounting periods, and therefore create deferrals.

Which of the Following Transactions Does Not Create a Deferral