Answer:
b. exists when a company receives cash before recognizing the associated revenue
Step-by-step explanation:
When Cash is collected in advance for a service yet to be rendered or goods yet to be delivered to the customer, the entries to be posted are debit to cash account and a credit to deferred revenue.
When the revenue is earned, it is recognized by crediting revenue and debiting deferred revenue with the amount earned.
Hence a deferral exists when a company receives cash before recognizing the associated revenue.