Explain Why Deflation Could Prevent People from Being Able to Repay

question 125

Essay

Explain why deflation could prevent people from being able to repay their debts.

---

Definitions:

Recorded

The process of documenting financial transactions in accounting records or journals.

Adjusting Entries

Journal entries made in accounting records to correct or update financial transactions, often at the end of an accounting period.

Prepaid

Expenses paid in advance for goods or services, which are then recognized over time as the benefits are received.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded in the financial statements, representing liabilities.