Accrual journal entries are those which are passed for all transactions in which product or service is given or received but payment is not received or paid. For example receivable accounts, payable accounts, outstanding employee salaries, income taxes payable and unbilled accounts. For tracking all these liabilities and assets, we have to pass accrual entries. In accrual entries, we credit all payable accounts and debit all the receivable accounts. These accounts carried forward through balance sheet. If next year, we pay or receive, we close these accounts.
For Outstanding Expenses and buy on credit
Expense account or purchase account Dr.
Creditor Account or Outstanding expenses account Cr.
For outstanding incomes
Outstanding incomes account Dr.
Income account Cr.
Deferral journal entries are those which are passed for all transactions in which payment is received or paid in advance but product is not given or received. In deferral entries, we also record the transactions in which we received or paid advance for any service. In these entries, we debit all paid advance payments. We credit all received advance money.
For advance payment for expense or for product
Advance expenses account or Advance for Product Buying Dr.
Expenses account or Purchase Account Cr.
For Advance received for expense or for product
Income Account or Sales Account Dr.
Advance Income Account or Advance Received for Product Selling Account Cr.
Remember: All these entries are passed at the end of financial year.