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Deferred financing costs or debt issuance costs is an accounting concept meaning costs associated with issuing debt (loans and bonds), such as various fees and commissions paid to investment banks, law firms, auditors, regulators, and so on. Since these payments do not generate future benefits, they are treated as a contra debt account.
A deferred charge is a cost recorded in a later accounting period for its expected future benefit, or to comply with the matching principle, which matches costs with revenue. Deferred charges include costs such as those related to startup activities, obtaining long-term debt , or running major advertising campaigns.
In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business partnership, a corporation, private limited company or other organization such as government or not-for-profit entity.
A deferred tax asset is usually an item on a company’s balance sheet that was created by the early payment or overpayment of taxes. They are financial assets that can be redeemed in the future ...
Under the historical cost basis of accounting, assets and liabilities are recorded at their values when first acquired. They are not then generally restated for changes in values. Costs recorded in the Income Statement are based on the historical cost of items sold or used, rather than their replacement costs. For example,
Hence, certain costs which are incurred to acquire insurance contracts should not be recognized as an expense in the accounting period in which they are incurred but should be capitalized as an asset on the balance sheet and gradually amortized over the lifetime of the insurance contracts.
Under International Financial Reporting Standards, as well as many other accounting principles, tax expense is the result of computing current and deferred tax payable using the asset-liability method in which the balance sheet is seen as primary and the income statement as secondary.
The accounts are typically arranged in the order of the customary appearance of accounts in the financial statements: balance sheet accounts followed by profit and loss accounts. The charts of accounts can be picked from a standard chart of accounts, like the BAS in Sweden.