Interest gap report and Prepayment: Difference between pages

Revision as of 15:52, 9 September 2020

1. Banking.

The non-contractual early repayment by bank customers of, for example, fixed rate mortgages.

2. Accounting.

An amount paid in advance for a financial benefit, represented by an asset in the organisation's balance sheet.

It is a prepaid expense.

Example: Venue hire

We book a venue for a function.

And pay 50% of the hire fee in advance.

The 50% paid in advance is an ASSET for us.

We are going to enjoy the use of the venue in future, but it has already been paid for.

So the 50% already paid represents a future economic benefit.

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-A report of the timing at which interest rate assets and liabilities are repriced.
+. ''Banking''.
+The non-contractual early repayment by bank customers of, for example, fixed rate mortgages.
+. ''Accounting''.
+An amount paid in advance for a financial benefit, represented by an asset in the organisation's balance sheet.
+It is a prepaid expense.
+<span style="color:#4B0082">'''''Example: Venue hire'''''</span>
+We book a venue for a function.
+And pay 50% of the hire fee in advance.
+The 50% paid in advance is an ASSET for us.
+We are going to enjoy the use of the venue in future, but it has already been paid for.
+So the 50% already paid represents a future economic benefit.
-Sometimes also known as a ''gap report''.
 == See also ==
-* [[Assets]]
+* [[Accrual]]
-* [[Exposure]]
+* [[Average effective maturity]]
-* [[Gap report]]
+* [[Bookkeeping]]
-* [[Interest gap]]
+* [[Early Repayment Charge]]
-* [[Interest rate risk]]
+* [[Extension risk]]
-* [[Liabilities]]
+* [[Prepayment risk]]
-* [[Maturity ladder]]
+* [[Prepayments]]
+[[Category:Accounting,_tax_and_regulation]]
 [[Category:Identify_and_assess_risks]]
+[[Category:Manage_risks]]
+[[Category:Risk_frameworks]]