What Is Accrued Liability? The term “accrued liability” refers to an expense incurred but not yet paid for by a business. These are costs for goods and services already delivered to a company for which it must pay in the future. A company can accrue liabilities for any number of obligations and are recorded on
What Is Accrued Market Discount? Accrued market discount is the gain in the value of a discount bond expected from holding it for any duration until its maturity. Because discount bonds are sold below face value, it is expected that they will gradually rise in market price until reaching maturity. Key Takeaways A discount bond
What Is an Accrued Monthly Benefit? An accrued monthly benefit is the dollar amount that an employee can expect to receive as a pension benefit after retiring. The accrued monthly benefit is based primarily on the employee’s years of service and salary history. Key Takeaways Companies that offer pensions generally have a vesting period before
What Is Accrued Revenue? Accrued revenue is revenue that has been earned by providing a good or service, but for which no cash has been received. Accrued revenues are recorded as receivables on the balance sheet to reflect the amount of money that customers owe the business for the goods or services they purchased. Accrued
What Is Accumulated Benefit Obligation (ABO)? Accumulated benefit obligation (ABO) is the approximate amount of a company’s pension plan liability at a single point in time. ABO is estimated based on the assumption that the pension plan is to be terminated immediately; it does not consider any future salary increases. This differs from the projected
What Is Accumulated Depreciation? Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its life. Accumulated depreciation is a contra asset account, meaning its natural balance is a credit that reduces the overall asset value. Key Takeaways Depreciation is recorded to tie the cost of using a long-term capital
What Is Accumulated Earnings and Profits (E&P)? Accumulated earnings and profits (E&P) is an accounting term applicable to stockholders of corporations. Accumulated earnings and profits are a company’s net profits after paying dividends to the stockholders, serving as a measure of the economic ability of a corporation to pay such cash distributions. Key Takeaways Accumulated
What Is an Accumulated Earnings Tax? An accumulated earnings tax is a tax imposed by the federal government on companies with retained earnings deemed to be unreasonable and in excess of what is considered ordinary. Essentially, this tax encourages companies to issue dividends, rather than retain their earnings. The IRS allows for certain exemptions to
What Is an Accumulated Fund? An accumulated fund is where budgetary surpluses are held by a nonprofit organization (NPO), and it is analogous to the corporate profit earned by a traditional entity based on its retained earnings. Key Takeaways An accumulated fund holds excess money received by a non-profit organization (NPO).Similar to the retained earnings
What Is Accumulated Income? Accumulated income, commonly referred to as retained earnings, includes the portion of net income that is retained by a corporation over time, rather than being distributed as dividends. Any accumulated income is typically used by the corporation to reinvest in its principal business or to pay down its debt. Key Takeaways
