Accrued and Deferred Revenues and Expenses

deferred (unearned) revenue

a liability resulting from the receipt of cash before the good or service is provided

deferred (prepaid) expense

an asset created when a business makes advanced payments of future expenses

accrued revenue

Revenue has been earned but hasn't been collected

splitting between accounting periods

main part of accrual

Deferral

term meaning something being put off until later

Accrual

term meaning something has built up and accumulated

whether money has changed hands (accruals: money has not changed hands yet; deferrals: money has already changed hands)

what is the difference between accrual and deferral

accrued expense

when a company has incurred an expense but hasn't yet paid cash or recorded an obligation to pay

end of the accounting period

when are adjustments made?

in the period in which they are incurred

when are expenses recognized?

in the period in which it is earned

when are revenues recognized?