A cost/ expenditure that has been incurred within a certain accounting period though its corresponding revenue generation has not completed yet. In other words, it is that part of the cost that has not been balanced by the income that it will take part in its generation in the future. For that very reason, this cost is perceived to be an asset, not an operating cost for the respective accounting period (during which it was incurred).
Therefore, this cost is not treated as part of operating cost for the incurrence year, although it will become an operating cost when charged against that part of income to which it corresponds in the future periods- that is, the income it will help generate later on.
It is also known as a deferred debit or a deferred expense.
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