What does deferred mean in accounting?

In accounting this means to defer or to delay recognizing certain revenues or expenses on the income statement until a later, more appropriate time. Revenues are deferred to a balance sheet liability account until they are earned in a later period.

When are expenses deferred to a balance sheet asset account?

Expenses are deferred to a balance sheet asset account until the expenses are used up, expired, or matched with revenues. At that time they will be moved to an expense on the income statement.

What is an expense deferral?

An expense deferral is an adjusting entry that pushes the recognition of an expense to a future fiscal period because payment for the expense was made prior to the recognition of the related revenue or prior to receiving the item. An example is when a renter pays their quarterly rent payments in advance.

What is manual accounting for deferrals?

Manual accounting for deferrals can become unwieldy, inaccurate or overlooked without the right software. Deferrals are all about timing, within the context of earning revenue and matching expenses. They are used by companies of all sizes and industries to improve the accuracy of their financial statements.