Asked by: Loutfi Gstottl
asked in category: General Last Updated: 17th May, 2020

What is liability method?

Under the liability method, a liability account is recorded when the amount is collected. The common accounts used are: Unearned Revenue, Deferred Income, Advances from Customers, etc. Take note that the amount has not yet been earned, thus it is proper to record it as a liability.

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Considering this, how do you find the tax expense?

Tax expenses are calculated by multiplying the appropriate tax rate of an individual or business by the income received or generated before taxes, after factoring in such variables as non-deductible items, tax assets, and tax liabilities.

is prepaid rent an asset or liability? Rent Expense. Prepaid rent is a balance sheet account, and rent expense is an income statement account. Prepaid rent typically represents multiple rent payments, while rent expense is a single rent payment. So, a prepaid account will always be represented on the balance sheet as an asset or a liability.

Simply so, are deferred taxes assets or liabilities?

A deferred tax asset is an item on the balance sheet that results from overpayment or advance payment of taxes. It is the opposite of a deferred tax liability, which represents income taxes owed. Beginning in 2018, most companies can carryover a deferred tax asset indefinitely.

Is unearned rent a liability?

To account for this unearned rent, the landlord records a debit to the cash account and an offsetting credit to the unearned rent account (which is a liability account). Under the cash basis of accounting, the landlord does not have any unearned rent. Instead, any rent payments received are recorded as income at once.

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