The deferred rent liability or asset for an operating lease with leveled rents is the difference between the cash rent paid and the level rent accrued. If this box is checked, “cash rent paid” includes a prorated portion of the rent payment if the report period begins or ends in the middle of a rent payment period. If this box is unchecked, cash payments are counted in full on the day of the payment. If you have fiscal periods that do not regularly end on the same day of the month, the latter method can cause the deferred rent balance to swing substantially from period to period, depending on whether the period ends just before or after a payment is made.
This option is selected by going to File > System Options. It has no effect for ASC 842/IFRS 16 reporting.