Deferred Charge
A prepaid expense that is recognized on the balance sheet as an asset until it is used. Investopedia Says:
Recording deferred charges in this manner ensures that a company is adhering to Generally Accepted Accounting Principles (GAAP) by matching revenues with expenses.
A prime example of a deferred charge is rent. Consider the case where a company pays a lump sum to its landlord to cover six months' rent. As each month approaches, the company will use a portion of the funds from its deferred charges account and recognize this portion as an expense on its financial statements. This process ensures that revenues for the month are matched with the expenses incurred for that month. Related Terms:
Balance Sheet
Current Assets
Deferred Long-Term Liability Charges
Deferred Revene
Expense
Generally Accepted Accounting Principles - GAAP
Impose
Other Current Assets
Prepaid Expense
Revenue |