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Tutor can you please differentiate between
(1) Prepaid Income and Deferred Income
(2) Accrual Concept and Realisation ConceptNeither of these are likely to be relevant for the exam!!
Prepaid income is income received in advance (before it has actually been earned). Deferred income is the same – we take credit for the income when it is actually earned.
The accrual concept is that we take credit for income when it is earned and that we charge expenses when they are incurred (not when the cash is received or paid). The realisation income is the same but is just referring to income.
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