What defines deferred taxes in governmental accounting?

Deferred taxes in governmental accounting are defined as taxes that are expected to be received more than 60 days after the fiscal year end. This concept is rooted in the accrual basis of accounting, which recognizes revenues when they are earned, regardless of when the cash is actually received.

By identifying taxes expected to be received after 60 days from the end of the fiscal year, this approach allows for the accurate matching of resources with the period in which they are applicable. This timeframe is significant because it helps distinguish between current and long-term financial resources, ensuring that the financial statements accurately reflect the financial position and operational results of the government entity.

In contrast, taxes collected within 30 days of year end and taxes received immediately after assessment would typically be recognized as current revenues since they are expected to be available to fund current expenditures. Taxes that will not be collected in the next year are related to longer-term considerations but do not specifically tie to the operational timeline for recognition like the 60 days does. Thus, understanding the 60-day rule clarifies how deferred taxes play a role in the accounting and financial reporting framework for governmental entities.