Accounts payable, or the debts a business needs to pay out, are an area riddled with terms. Accounting professionals must determine the proper terms to use to describe each of the notations they make, for business information, legal requirements and for taxation purposes. A business needs to carefully explain its income and losses. As a business professional, a thorough knowledge of terms like accelerated depreciation, deferred revenue, and comprehensive income is an important part of performing well.
Accelerated asset depreciationAccelerated asset depreciation is a bookkeeping method used to show how value is being lost from property. In particular, the property is losing value at a faster pace than normal.
Carrying value, or book valueCarrying value, also known as book value, refers to a business's total assets over total liabilities. It is the amount shown on the books for assets net any reductions, including those for accumulated depreciation or bad debts.
Comprehensive incomeComprehensive income includes unrealized gains and losses. In comparison with net income, comprehensive income is not reported on an income statement.
Deferred revenue, or unearned incomeDeferred revenue, or unearned income, refers to an item that will become an asset over time but is initially a liability. The item becomes revenue usually through the normal operations of a business. For example, a landlord may have unearned rent, rent that is expected to be paid, but as of yet is not. This is deferred revenue for the business.
Capitalized interestIn accounts payable, capitalized interest is an account that is created to hold funds to be used to pay off upcoming interest payments. It is noted as an asset.
Interest expenseInterest expense is often part of an accounts payable statement and calculation. It is defined as a liability. It is the cost of borrowing money.
Internal Revenue Service provides a description of interest expense for business and rental property, including how it must be accounted for on taxation forms.