Define preferred creditor and deferred income

Hi Subhasni

Welcome to the forums.

Preferred Creditors.-a. A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class.' [30 Stat. at L. 544, chap. 541.]

Picked from caselaw.lp.findlaw.com

DEFERRED INCOME is that income for which the cash has been collected by the company, but have yet to be "earned". For example, a customer pays their annual software license upfront on the 1st Jan. As the company financial year-end is 31st May, the company would only be able to record five months of the income as turnover in the profit and loss account. The rest would be accrued in the balance sheet as a "deferred" creditor.

Picked from ventureline.com

Please let me know if you have any queries regarding this subject.

Regards
Roxette