The first three groups are discussed below, as well as another
analogous group.
_Accrued Expenses._ These expenses comprise the liability existing
at the close of a fiscal period because of expenses incurred but not
settled for and oftentimes not yet due. Information as to these may be
gathered—not in completeness however—from an examination of the various
expense accounts and a somewhat intimate knowledge of the operations of
the business. Unless a record is kept of all services being rendered to
the business, it is very easy to omit some items of this kind. These
will be discussed in detail under “Current Liabilities,” page 350.
_Deferred Income._ This income comprises the items of income received
in advance of the full performance of the service required to earn
it. In cases of this kind there are in the possession of the business
certain assets which must be used to perform the service not yet
completed in order to entitle the business to the full enjoyment of the
income. That is, the property of the owners is liable for the service
not yet rendered. Also, in order to make a correct showing of results
as between the current fiscal period and the next, this unearned income
must be carried forward for credit in the period in which the service
is performed.
_Premium on Bonds._ Somewhat analogous to deferred income is the item
of premium on bonds. As indicated in Chapter XV this is preferably
treated as a direct deduction from the periodic interest payments on
the bonds, because the bonds were marketed at a rate higher than the
interest rate prevailing at the time of their flotation. Inasmuch as
the premium must be spread over the life of the bonds, its unexpired
portion will appear as of the nature of deferred income at all
intermediate stages. A more detailed showing of this is given in