What is accrual and deferral in SAP FI - Financial Accounting?

SAP Term: accrual and deferral

• Component: FI

• Component Name: Financial Accounting

• Description: The assignment of an organization's receipts and expenditure to particular periods, for purposes of calculating the net income for a specific period. A distinction is made between: Accruals - An accrual is any expenditure before the closing key date that represents an expense for any period after this date. Deferrals - Deferred income is any receipts before the closing key date that represent revenue for any period after this date.

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• Key Concepts: 
  Accrual and deferral are accounting terms used to describe the timing of when revenue and expenses are recognized. Accrual is the recognition of revenue or expenses before they are actually received or paid. Deferral is the recognition of revenue or expenses after they are actually received or paid. In SAP Financial Accounting, accrual and deferral are used to ensure that all transactions are recorded in the correct period. 
  
  How to use it: 
  In SAP Financial Accounting, accrual and deferral can be used to record transactions in the correct period. For example, if a company receives a payment for goods or services that were provided in a previous period, the payment can be recorded as a deferred revenue. Similarly, if a company pays for goods or services that will be received in a future period, the payment can be recorded as an accrued expense. 
  
  Tips & Tricks: 
  When recording accrual and deferral transactions in SAP Financial Accounting, it is important to ensure that all transactions are properly documented and tracked. This will help ensure that all transactions are recorded accurately and in the correct period. 
  
  Related Information: 
  For more information on accrual and deferral in SAP Financial Accounting, please refer to the SAP Help Portal (https://help.sap.com/viewer/product/SAP_FI/).