Which of the Following Properly Describes a Deferral

question 68

Multiple Choice

Which of the following properly describes a deferral?

• A) Cash is received after revenue is earned.
• B) Cash is received before revenue is earned.
• C) Cash is paid after expense is incurred.
• D) Cash is paid in the same time period that an expense is incurred.

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Definitions:

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life.

Second Year

Refers to the second year of a specific period, such as an academic program, fiscal period, or any defined timeframe.

Double-Declining-Balance Method

A method of accelerated depreciation that doubles the straight-line depreciation rate and applies it to the remaining book value each year.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.