deferred credit

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Income received or recorded before it is earned, under the accruals concept. The income will not be included in the profit and loss account of the period but will be carried forward on the balance sheet until it is matched with the period in which it is earned. A common example of a deferred credit is a government grant. The grant is shown as a separate item or under creditors in the balance sheet, and an annual amount is transferred to the profit and loss account until the deferred credit balance is brought to nil.

Subjects: Financial Institutions and Services — Accounting.

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