Can anyone please tell me
What is meant by deferred credit?
Thank you in advance.
2 Replies
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 06 November 2010
In simple language, Deferred credit means income which has been received but its benefit is yet to be derived in future.
For e.g.:- Suppose in case of Non profit organisation, membership fees received in lump sum from one member will give benefit in future period also depending upon its actual due amount for a year.
It is because ,usually fees is received as and when it becomes due but here its received before hand but benefit is yet to matched with the expenses of any particular year.(Recall matching principle of accounting). In other words the benefit is deferred and this is called deferred credit.
Hope you are clear.
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