Category Archives for Terms

Accrued Expense – Definition & Example

Accrued expense is an expense that has been incurred but has not yet been paid. Put it in simple words, payment for these expenses are done after the product or service is taken. For example, salaries & wages, interest on bank loan, income tax etc. Contrary to prepaid expense, an accrued expense is treated as […]

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Deferred Expense – Definition & Example

Deferred expense (also known as prepaid expense) is the cost which has been incurred but the product or service has not yet been received or consumed. As this is the cost for advance payment, this is treated as current assets (If the underlying goods or services are expected to be taken within a year) on […]

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Deferred Revenue – Definition & Example

Deferred revenue (also known as unearned revenue) is the income which has been received but the product or service has not yet been delivered to customer. As this is the amount which has been received in advance, this is treated as current liability (If the agreement is to provide goods/ services within a year) and […]

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Employee Stock Option Plan (ESOP)

Employee Stock Option Plan (ESOP) is a corporate scheme in which sponsoring company distribute its share to the employees free of cost or at a price lower than market price. The price so decided is known as grant price or exercise price. This right can be exercised within time frame imposed by the company and only […]

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Discounted bills – Meaning & Example

Discounted bills are bills (Bill of exchange or Promissory notes) sold by corporates to banks or credit institutions to raise fund. These bills are sold at discounted price than the par value. The discounted amount then credited to the seller’s account. At the date of maturity, bank collects the amount from customer on behalf of […]

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