Accounting 101: Deferred Revenue and Expenses

Shuraatax30 Nov, 2024Finance

In accounting, the concepts of deferred revenue and deferred expenses play a vital role in maintaining accurate financial statements. They ensure that income and expenses are recognised in the correct accounting period, providing an accurate and fair view of a business’s economic health. Both terms are closely related to accrual accounting, which requires companies to recognise revenue when earned and expenses when incurred rather than when cash changes hands.