Prepaid Expense | Journal Entries & Accounting Record-Keeping Examples:

Example of Common Prepaid Expenses:

  • Rent (paying for a commercial space before using it)
  • Small business insurance policies
  • Equipment you pay for before use
  • Salaries (unless you run payroll in arrears)
  • Estimated taxes
  • Some utility bills
  • Interest expenses

What kind of account is the prepaid expense?

  • A prepaid expense is an asset. When you initially record a prepaid expense, record it as an asset. So, where are prepaid expenses recorded? Prepaid expenses in the balance sheet are listed as assets, too.
  • Prepaid expenses only turn into expenses when you actually use them. As you use the item, decrease the value of the asset. The value of the asset is then replaced with an actual expense recorded on the income statement.

What are the prepaid expenses journal entry Concepts?

How to record a prepaid expense Journal Entries?

Is prepaid insurance an expense on the income statement?

How to record Prepaid expenses on a balance sheet?

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Aktaruzzaman S M

Aktaruzzaman S M

I am organized and self-driven individual, an enthusiastic Accounts & Finance professionals.

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