October 30, 2016 admin

Deferred Charges, Deposits & Other

Assets

DEFERRED CHARGES, DEPOSITS & OTHER ASSET ACCOUNT
1835

ACCOUNT EXPLANATION
Deferred charges generally include expenditures that are proper charges to income of future years. Deposits include amounts paid that are refundable in future years.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Utility deposit CD
    Deferred Charges, Deposits & Other 1835
      Cash in Bank—General 1001
COMMENTS
  • Subsidiary records should support this account.
  • Charges to this account are generally those whose benefit to the dealership will be realized over a period beyond one year or which will not be refunded within one year.
  • Deferred charges should be amortized over the period to be benefited. Amounts amortized should be credited directly to this account and charged to the appropriate expense account.
  • This account provides a means of applying deferred income tax accounting principles to the income tax expense arising when there are items expensed for book purposes but not deductible for income tax purposes for two or more years. See Account 1540, Prepaid Taxes—Income, for income tax on expense deducted for book purposes in the current period but not deductible for income tax purposes until the following year. Tax counsel should be consulted regarding the use of deferred income tax accounting.