Both Accruals and deferrals are used for expenses and for revenues.
Difference between an Accrual and a Deferral are as follows
- An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt
- Accrued Expenses are expenses already incurred but still unpaid whereas deferred expenses are expenses already paid but not yet incurred.
- An accrual of an expense refers to the reporting of an expense and the related liability in the period in which they occur, and that period is prior to the period in which the payment is made whereas A deferral of an expense refers to a payment that was made in one period, but will be reported as an expense in a later period.
- An accrual of revenues refers to the reporting of revenues and the related receivables in the period in which they are earned, and that period is prior to the period of the cash receipt. Whereas a deferral of revenues refer to receipts in one accounting period, but they will be earned in future accounting periods.