Juggling a relationship between people raised in different religions is often filled with compromises on schedules, practices, and rules. This is a lot like what U.S. citizens have to wade through in reconciling accounting rules and tax rules.
While accounting for the end of a year will show on a balance sheet what income and liabilities are incurred, there are times when accounting rules determine that tax is accrued, but tax rules dictate that the tax is to be paid the following year. This occurs, for example, when a product is sold on an installment plan. The total amount is booked as a deferred tax liability, although tax to be paid is staggered in schedule depending on whether taxes are due quarterly, monthly, or bi-annually.
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Finance: What is Deferred Compensation?8 Views
Finance allah shmoop what is deferred compensation Well you don't
get it today You get it next year at some
point you know differed If you've gotten paid today it
would have binford but then it was deford's so well
yeah it's money you don't get right now Yeah so
whywould compensation be deferred Well lotsa reasons think about a
bonus that a sales person might earn through out the
year like they get two grand in bonus money payable
next year for each month that they sell over four
pounds of yellowcake uranium powder Bob here did it in
january messed around in february and march and was a
good boy in april may and june and then on
lee hit one more sales goal ahead of christmas doing
four pounds in uzbekistanian november So bob had five months
hitting his sales bonus target and we'll have owed to
him ten grand in bonus money e compensation that was
deferred and noting that all bonuses are paid in january
of the following year like it's deferred to the following
year So from the company's perspective they show deferred compensation
as a line item or a thing on their balance
Sheet is a liability And then they converted to being
an expense when they pay everything out the first month
of the next year so come january Bob will be
very happy with his healthy bonus That is you know 00:01:29.357 --> [endTime] assuming he's still around to enjoy it there No
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