Deferred debit definition
/What is a Deferred Debit?
A deferred debit is an expenditure that has not yet been consumed, so it is temporarily classified as an asset. Once the expenditure has been consumed, it is charged to expense. In many cases, these deferred debits are charged to expense in the following reporting period.
Presentation of Deferred Debits
Deferred debits are usually classified within the prepaid expenses account, which appears as a current asset on the balance sheet. Only in rare cases are these deferred expenditures going to be consumed so far in the future that they are classified as long-term assets on the balance sheet.
Examples of Deferred Debits
Examples of deferred debits are prepaid insurance, prepaid medical costs, and prepaid advertising. Another major deferred debit is prepaid rent.
Similar Terms
A deferred debit is also known as a prepaid expense.