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Accruals and Deferrals

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The accrual basis of accounting requires the posting of accruals and deferrals. What are these? Provide at least two examples.

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Solution Summary

The solution describes accruals and deferrals in accounting.

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Accruals are those assets that have been earned but no actual revenue collected or those liabilities that are owed but have not yet been paid.

One example of an accrual would be salaries accrued. Suppose a company pays its employees every other Friday. On the Friday in between paydays, no money is paid out in the form of salaries. However, every employee who worked for the week still has earnings. Although the company will not actually pay ...

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