Share
VIDEOS 1 TO 50
Deferral Example: Unearned Revenue
Deferral Example: Unearned Revenue
Published: 2013/10/30
Channel: The Accounting Tutor
Accounting in 10 Minutes or Less - Deferral vs. Accrual
Accounting in 10 Minutes or Less - Deferral vs. Accrual
Published: 2016/06/03
Channel: Professor Nance
Deferrals and Accruals Video Lecture
Deferrals and Accruals Video Lecture
Published: 2013/10/04
Channel: Bruce Marshall
accounting 221 video-Accrual vs Deferral
accounting 221 video-Accrual vs Deferral
Published: 2013/04/14
Channel: Elizabeth Lockett
Mario Maker - Epic Exploration Puzzles by Jon | Powerup Deferral and The Shell of Reckoning
Mario Maker - Epic Exploration Puzzles by Jon | Powerup Deferral and The Shell of Reckoning
Published: 2017/01/09
Channel: CarlSagan42
Deferral Adjusting Entries
Deferral Adjusting Entries
Published: 2013/03/18
Channel: Faye Talbot
Chap 03 Lecture:  Accruals and Deferrals
Chap 03 Lecture: Accruals and Deferrals
Published: 2011/09/14
Channel: oruaccounting
Lacan
Lacan's deferral of desire - Idealization of the Other - "Angst" as the authentic mode of being
Published: 2013/02/04
Channel: featheon
What Is Tax Deferral?
What Is Tax Deferral?
Published: 2009/05/11
Channel: TaxFoundation
Deferral Posting in Microsoft Dynamics NAV
Deferral Posting in Microsoft Dynamics NAV
Published: 2016/07/19
Channel: DSA Global Solutions
Deferral
Deferral
Published: 2016/08/14
Channel: Lorenzo Lanaro
Accrual and Deferral postings in fi
Accrual and Deferral postings in fi
Published: 2015/05/15
Channel: Entertainment Plus
Seaway - Deferral
Seaway - Deferral
Published: 2013/10/15
Channel: Mutant League Records
Deferral Meaning
Deferral Meaning
Published: 2015/04/25
Channel: ADictionary
FRM: Balance Sheet Accruals & Deferrals
FRM: Balance Sheet Accruals & Deferrals
Published: 2011/02/07
Channel: Bionic Turtle
Accruals and Deferrals in pictures
Accruals and Deferrals in pictures
Published: 2016/02/11
Channel: Cheri Bergeron
First College Acceptance (and Deferral) + Where I
First College Acceptance (and Deferral) + Where I'm Applying to College
Published: 2015/12/08
Channel: Joi Wade
Adjusting Entries  Deferrals -Part 2
Adjusting Entries Deferrals -Part 2
Published: 2010/08/31
Channel: profthompson
Accrual and deferral adjustments financial accounting CPA exam ch 4 p 1
Accrual and deferral adjustments financial accounting CPA exam ch 4 p 1
Published: 2016/07/27
Channel: Farhat's Accounting Lectures
Retirement Planning Mistake 5: Not Maximizing Tax Deferral
Retirement Planning Mistake 5: Not Maximizing Tax Deferral
Published: 2015/11/08
Channel: Lofty Enterprises, LLC.
Deferrals: How to automatically defer revenues and expenses in Microsoft Dynamics 2016
Deferrals: How to automatically defer revenues and expenses in Microsoft Dynamics 2016
Published: 2016/08/10
Channel: Christos Pittis
SAP FICO Accrual Deferral Documant - 22
SAP FICO Accrual Deferral Documant - 22
Published: 2017/03/20
Channel: SAP FICO IN TELUGU
Revenue / Expense Deferral in Dynamics GP
Revenue / Expense Deferral in Dynamics GP
Published: 2009/07/14
Channel: RoseASP
Accruals and Deferrals: Financial Accounting
Accruals and Deferrals: Financial Accounting
Published: 2013/07/10
Channel: AccountingED
The Accounting Cycle: Accrual and Deferral -- Expense Tutorial.
The Accounting Cycle: Accrual and Deferral -- Expense Tutorial.
Published: 2014/06/26
Channel: Dude Where's My Profit
The Accounting Cycle: Accrual and Deferral -- Revenue Tutorial
The Accounting Cycle: Accrual and Deferral -- Revenue Tutorial
Published: 2014/06/24
Channel: Dude Where's My Profit
Accounting Cycle: Adjusting Entries - Deferrals
Accounting Cycle: Adjusting Entries - Deferrals
Published: 2015/08/25
Channel: Brian Routh TheAccountingDr
Annuity Tax Deferral
Annuity Tax Deferral
Published: 2011/10/18
Channel: TheAnnuityThinkTank
Benefits of Tax Deferral Retirement Investing | Fidelity
Benefits of Tax Deferral Retirement Investing | Fidelity
Published: 2017/06/23
Channel: Fidelity Investments
Accrual and deferral adjustments financial accounting CPA exam CH 4 p 2
Accrual and deferral adjustments financial accounting CPA exam CH 4 p 2
Published: 2016/07/27
Channel: Farhat's Accounting Lectures
Revenue and Expense Deferral in Dynamics GP
Revenue and Expense Deferral in Dynamics GP
Published: 2014/04/01
Channel: Microsoft Dynamics at Armanino
How to respond to Early Decision or Early Action Deferral
How to respond to Early Decision or Early Action Deferral
Published: 2015/12/07
Channel: Admissions Intel
Dynamics GP Expense Deferral
Dynamics GP Expense Deferral
Published: 2009/07/02
Channel: Technology Management Concepts
Man convicted of murder asks for sentence deferral
Man convicted of murder asks for sentence deferral
Published: 2017/04/28
Channel: WMUR-TV
Mario Maker - Power-Up Deferral by Jon
Mario Maker - Power-Up Deferral by Jon
Published: 2017/01/12
Channel: Jagoe
Accrual and Deferrals
Accrual and Deferrals
Published: 2015/04/14
Channel: Abhishek Gosavi
Deferral Of Gratification Defines Human Beings
Deferral Of Gratification Defines Human Beings
Published: 2017/04/26
Channel: PeacefulAnarchism
What Is The Meaning Of Deferral In Accounting?
What Is The Meaning Of Deferral In Accounting?
Published: 2017/07/19
Channel: good SPARKY
Avoid the 401K/Tax Deferral Trap
Avoid the 401K/Tax Deferral Trap
Published: 2010/05/05
Channel: Scott Scholz
Attorney Fee Deferral Solution
Attorney Fee Deferral Solution
Published: 2015/11/24
Channel: Mirena Umizaj
UN rejects trial deferral for Kenyan leaders
UN rejects trial deferral for Kenyan leaders
Published: 2013/11/16
Channel: Al Jazeera English
Eligibility and Deferral Modification
Eligibility and Deferral Modification
Published: 2016/06/13
Channel: Retirement Plan Consultants
PNG Games Possible Deferral Due To Bad Weather
PNG Games Possible Deferral Due To Bad Weather
Published: 2017/02/03
Channel: EMTV Online
Class 301 - "Roth versus Traditional Deferrals"
Class 301 - "Roth versus Traditional Deferrals"
Published: 2013/09/10
Channel: Rethin(k) 401(k)
What is a 401(k) Deferral
What is a 401(k) Deferral
Published: 2016/03/07
Channel: McGuire Law Firm
Mario Maker - Power-up Deferral by Jon TRUE ENDING!
Mario Maker - Power-up Deferral by Jon TRUE ENDING!
Published: 2017/01/13
Channel: Jagoe
Microsoft Dynamics GP Revenue/Expense Deferrals
Microsoft Dynamics GP Revenue/Expense Deferrals
Published: 2011/08/23
Channel: How To Dynamics GP
Seaway - Deferral (live 3/22/15)
Seaway - Deferral (live 3/22/15)
Published: 2015/05/09
Channel: R Ski
A Quick Calculation of Social Security Deferral Using a HECM
A Quick Calculation of Social Security Deferral Using a HECM
Published: 2017/09/19
Channel: HECMAdvisorsGroup
Monologue, Why Seek Tax Deferral
Monologue, Why Seek Tax Deferral
Published: 2014/08/05
Channel: SCrowCollateralCorp
NEXT
GO TO RESULTS [51 .. 100]

WIKIPEDIA ARTICLE

From Wikipedia, the free encyclopedia
Jump to: navigation, search

A deferral, in accrual accounting, is any account where the asset or liability is not realized until a future date (accounting period), e.g. annuities, charges, taxes, income, etc. The deferred item may be carried, dependent on type of deferral, as either an asset or liability. See also accrual.

Deferrals are the consequence of the revenue recognition principle which dictates that revenues be recognized in the period in which they occur, and the matching principle which dictates expenses to be recognized in the period in which they are incurred. Deferrals are the result of cash flows occurring before they are allowed to be recognized under accrual accounting. As a result, adjusting entries are required to reconcile a flow of cash (or rarely other non-cash items) with events that have not occurred yet as either liabilities or assets. Because of the similarity between deferrals and their corresponding accruals, they are commonly conflated.

  • Deferred expense: cash has left the company, but the event has not actually occurred yet. Prepaid expenses are the most common type. For instance, a company may purchase a year of insurance. After six months, only half of the insurance will have been 'used' with another six months of the insurance still owed to the company. Thus, the company records half of the payment as an outflow (an expense) and the other half as a receivable from the insurance company (an asset).
  • Deferred revenue: Revenue has come into the company, but the event has still not occurred – it is unearned revenue. A magazine company, for instance, may receive money for a one-year subscription. However, the company has not spent the resources in producing and delivering those magazines and thus accountants record this revenue as a liability equal to the amount of cash received. The magazine company, while now having more cash on hand, also now owes a year of magazines. The amount of each magazine that gets delivered is then taken out of liabilities and recorded as revenue during the economic period in which it actually happens, not just when the company gets paid for it.

Deferral (deferred charge)[edit]

Deferred charge (or deferral) is cost that is accounted-for in latter accounting period for its anticipated future benefit, or to comply with the requirement of matching costs with revenues. Deferred charges include costs of starting up, obtaining long-term debt, advertising campaigns, etc., and are carried as a non-current asset on the balance sheet pending amortization. Deferred charges often extend over five years or more and occur infrequently unlike prepaid expenses, e.g. insurance, interest, rent. Financial ratios are based on the total assets excluding deferred charges since they have no physical substance (cash realization) and cannot be used in reducing total liabilities.[1]

Deferred expense[edit]

A Deferred expense or prepayment, prepaid expense, plural often prepaids, is an asset representing cash paid out to a counterpart for goods or services to be received in a later accounting period. For example, if a service contract is paid quarterly in advance, at the end of the first month of the period two months remain as a deferred expense. In the deferred expense the early payment is accompanied by a related recognized expense in the subsequent accounting period, and the same amount is deducted from the prepayment.[2] The deferred expense shares characteristics with accrued revenue (or accrued assets) with the difference that an asset to be covered later are proceeds from a delivery of goods or services, at which such income item is earned and the related revenue item is recognized, while cash for them is to be received in a later period, when its amount is deducted from accrued revenues.

For example, when the accounting periods are monthly, an 11/12 portion of an annually paid insurance cost is added to prepaid expenses, which are decreased by 1/12 of the cost in each subsequent period when the same fraction is recognized as an expense, rather than all in the month in which such cost is billed. The not-yet-recognized portion of such costs remains as prepayments (assets) to prevent such cost from turning into a fictitious loss in the monthly period it is billed, and into a fictitious profit in any other monthly period.

Similarly, cash paid out for (the cost of) goods and services not received by the end of the accounting period is added to the prepayments to prevent it from turning into a fictitious loss in the period cash was paid out, and into a fictitious profit in the period of their reception. Such cost is not recognized in the income statement (profit and loss or P&L) as the expense incurred in the period of payment, but in the period of their reception when such costs are recognized as expenses in P&L and deducted from prepayments (assets) on balance sheets.

Deferred revenue[edit]

Deferred revenue (or deferred income) is a liability, such as cash received from a counterpart for goods or services that are to be delivered in a later accounting period. When such income item is earned, the related revenue item is recognized, and the deferred revenue is reduced. It shares characteristics with accrued expense with the difference that a liability to be covered later is an obligation to pay for goods or services received from a counterpart, while cash for them is to be paid out in a later period when its amount is deducted from accrued expenses.

For example, a company receives an annual software license fee paid out by a customer upfront on the January 1. However, the company's fiscal year ends on May 31. So, the company using accrual accounting adds only five months' worth (5/12) of the fee to its revenues in profit and loss for the fiscal year the fee was received. The rest is added to deferred income (liability) on the balance sheet for that year.

See also[edit]

References[edit]

  1. ^ "deferred charge". BusinessDictionary.com. 2010. Retrieved May 15, 2010. 
  2. ^ Curtis L. Norton; Michael A. Diamond; Donald P. Pagach (2006). Intermediate accounting: financial reporting and analysis. Cengage Learning. p. 25. ISBN 978-0-618-72185-6. Retrieved 2 April 2012. 

Disclaimer

None of the audio/visual content is hosted on this site. All media is embedded from other sites such as GoogleVideo, Wikipedia, YouTube etc. Therefore, this site has no control over the copyright issues of the streaming media.

All issues concerning copyright violations should be aimed at the sites hosting the material. This site does not host any of the streaming media and the owner has not uploaded any of the material to the video hosting servers. Anyone can find the same content on Google Video or YouTube by themselves.

The owner of this site cannot know which documentaries are in public domain, which has been uploaded to e.g. YouTube by the owner and which has been uploaded without permission. The copyright owner must contact the source if he wants his material off the Internet completely.

Powered by YouTube
Wikipedia content is licensed under the GFDL and (CC) license