What's it: A deferred tax asset represents an inflow of future tax-related economic benefits. It eventually returns to business in the form of tax relief, reducing future taxable income.For example, a company pays taxes early before they are
Current Assets
Cash Equivalent: Meaning, Examples And Why It Matters
What's it: A cash equivalent is a financial asset that can easily be converted to cash and have minimal risk of changing prices. Because of this nature, companies combine cash accounts with cash equivalents into one: cash and cash equivalents.
Cash in Accounting: Meaning, Reporting, Pros, Cons
What's it: Cash is money in the form of banknotes or coins. In accounting, other examples of cash are checks, notes, and demand deposits.Cash is the most liquid asset and vital to the liquidity of the company. Companies can use them
Current Assets: Items, How to Calculate and Analysis
What it is: Current assets are cash and other assets that the company expects to be converted into cash, sold or used in a year or normal operating cycle. Why it matters: Current assets are useful for meeting liquidity needs and
Cash and Cash Equivalents: Meaning, Importance
Cash and cash equivalents are cash plus short-term investment instruments that you can immediately cash and have minimal risk of changes in value. You can find this account in the top row of assets on the balance sheet.What are the components of
Accounts Receivable: Meaning, How to Report and Analyze It
Accounts receivable, or sometimes called trade receivables, is the amount owed by customers for the purchase of goods and services on credit. In other words, this account appears when the company has provided products or services but has not received
Marketable securities
Marketable securities are securities that can be sold in a short time without losing the principal or initial investment. The maturity is usually more than 90 days but less than one year. In the financial balance sheet, the company reports them as a
Prepaid expense
Prepaid expense is typical operating cost that have been paid before maturity. In other words, the company has made a cash payment but has not recognized it as an expense in the income statement. Such recognition is possible in accrual accounting in