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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Accounting question
Hi SIR. I have a few questions. Could you please tell me those?
Is it correct:
1. Accrued income is when the income is earned but cash is not received – it is a current asset?
2. Accrued expenses is when the expense is incurred but cash is not paid – it is a current liability?
3. According to accruals accounting we record income and expense when they have incurred irrespective when the cash will be received or paid?
4. Deferred income is when the cash is received but income has not earned and we still owe the service to customers?
5. Deferred expense refers to when the cash is paid in advance but the expense is not incurred because it relates to next accounting year?
6. Deferred considered could be either deferred income or expense based on the question which means money is received or paid in future?
Please explain!
1 to 3 are correct.
4 and 5 are correct but not really relevant for Paper FA
6 ‘deferred considered’ does not mean anything. Questions make clear the situation.