Deferrals
Accounting glossary · Understand, connect, apply
Deferrals arise when cash is paid or received before the related expense or revenue is recognized. The initial amount is carried as an asset or liability until the relevant activity occurs.
Example
A customer pays $600 for future services. The seller initially records unearned revenue, then recognizes revenue as the services are provided.
Remember the difference
Accruals recognize activity before the cash flow; deferrals postpone recognition after an earlier cash flow.
Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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