Deferred Tax Liability Accounting

Deferred tax liabilities are shown as long term liabilities on the balance sheet of a business, and represent obligations to pay income tax at some point in the future arising from temporary timing differences.

Last modified July 16th, 2019 by Michael Brown
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Accrual to Cash Conversion

The accruals and cash basis of accounting are two different methods of preparing financial statements. A business can calculate information relating to cash receipts and payments from it’s accrual based accounting system using accrual to cash conversion formulas.

Last modified July 16th, 2019 by Michael Brown
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Cash to Accrual Conversion

The cash and accruals basis of accounting are two different methods of preparing financial statements. The conversion from cash basis to accrual basis can be carried out using cash to accrual conversion formulas.

Last modified July 16th, 2019 by Michael Brown
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Accrued and Deferred Income and Expenditure Journals

The accrued and deferred income and expenditure journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of accrual and deferral transactions.

In each case the journal entries show the debit and credit account together with a brief narrative.

Last modified July 16th, 2019 by Michael Brown
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Accruals and Deferrals

Accrual and deferral journal entries are posted to ensure that revenue and expenditure are included in financial statements on an accruals not a cash basis.

Last modified July 16th, 2019 by Michael Brown
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Unearned Revenue Journal Entry

Unearned revenue is generated when a business supplies its services to a customer and the services are invoiced in advance.

For example, suppose a business provides maintenance services and invoices for annually in advance. At the time of invoicing the service has not been provided and none of the revenue has been earned, it therefore needs to be credited to the unearned revenue account.

Last modified July 16th, 2019 by Michael Brown
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Cash Advance Received From Customer

When a business receives a cash advance from a customer for goods not yet delivered, it needs to record this a balance sheet liability and not revenue. When the goods are delivered, the revenue is earned, and the cash advance can be used to clear the balance on the customer accounts receivable account.

Last modified July 16th, 2019 by Michael Brown
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Revenue Received in Advance Journal Entry

A business applies to a bank and receives a loan of 25,000. The money is paid direct to the bank current account of the business.

The double entry bookkeeping journal entry to show the business receive a loan into its bank account is as follows:

Last modified July 16th, 2019 by Michael Brown
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Deferred Revenue Journal Entry

Deferred revenue is generated when a business supplies its services to a customer and the services are invoiced in advance.

For example, suppose a business provides web design services and invoices for annual maintenance of 12,000 in advance. At the time of invoicing the service has not been provided and the service revenue has not been earned, it therefore needs to be credited to the deferred revenue account.

Last modified July 16th, 2019 by Michael Brown
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