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✨ EY Prep 🩷
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Accounting
🟡 Medium
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What is the difference between a prepayment and deferred income?
A.
They are the same — both represent cash paid before the service is delivered
B.
Prepayment = asset (you paid for something not yet received). Deferred income = liability (you received cash for something not yet delivered to the customer)
C.
Prepayment is an expense; deferred income is revenue
D.
Prepayments appear on the income statement; deferred income on the balance sheet only