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A deferred expense, also known as a prepayment or prepaid expense, is an asset representing cash paid in advance for goods or services to be received in a future accounting period. For example, if a service contract is paid quarterly in advance, the remaining two months at the end of the first month are considered a deferred expense.
For clarity’s sake, a common example of a deferred tax liability is an installment sale. When the sale is made, your company’s books reflect the total amount of the sale. However, tax law ...
Get key insights on deferred revenue as a liability. Plus, understand proper analysis to inform business decision-making along with investment strategies.
In financial accounting, a liability is a quantity of value that a financial entity owes. More technically, it is value that an entity is expected to deliver in the future to satisfy a present obligation arising from past events. [1] The value delivered to settle a liability may be in the form of assets transferred or services performed.
Deferred tax is a notional asset or liability to reflect corporate income taxation on a basis that is the same or more similar to recognition of profits than the taxation treatment. Deferred tax liabilities can arise as a result of corporate taxation treatment of capital expenditure being more rapid than the accounting depreciation treatment.
Through tax-deferred accounts such as an IRA or a 401(k), you can invest in stocks, exchange-traded funds (ETFs), mutual funds, bonds, certificates of deposit (CDs) and other assets. With ...
Being a standard of deferred payment is one of the functions of money; it is distinct from: The standard of deferred payment can be distinguished from the medium of exchange function because of how its value might change over time. If payment is to be deferred, it should be denominated in a unit which is expected to maintain its value.
The recording of the liability in the entity's balance sheet is matched to an appropriate expense account on the entity's income statement. In U.S. Generally Accepted Accounting Principles (U.S. GAAP), a provision is an expense. Thus, "Provision for Income Taxes" is an expense in U.S. GAAP but a liability in IFRS.