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Deffered income and deferred revenu

Laxmi (Student) (74 Points)

10 May 2011

What is deferred revenue and deferred expenditure? Is there any difference between prepaid income and prepaid expense AND deferred revenue and deferred expense? Deferred revenue and deferred expense are similar like prepaid income and prepaid expense..? They all come in assets and liabilites only.. then y there is a difference..?

Plz tell me what entries should be passed?

Explain with some examples?

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3 Replies

CA NITUL MEHTA (KPMG-Senior Consultant-International Tax ) (236 Points)
Replied 02 June 2011

prepaid is the term genrally used in short term time perioed where as deffered is the word used for a expenses which benifits for a long term time perioed.

karthik (student) (34 Points)
Replied 02 June 2011

deferred revenue is a liability account used to collect deposits & cash receipts prior to the completion of the sale. deferred expenditure is an expenditure for which payment has been made or a liability incurred but which is carried forward on the presumption that it will be of benefit over a subsequent period or periods.

Aparna Raja K.C (Student) (520 Points)
Replied 03 June 2011

Prepaid Income and prepaid expenses -

its an income received in adavance or expense paid in advacnce before its due - short term

Deferred revenue and deferred expenses

its a revenue received in advance or expences paid in advance - long term- which will be written of in parts over the period during which the benefit will acccrue.