Difference between revisions of "Account for Prepaid Expenses"
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When running a business, it is very common for multiple expenses - rent and insurance, for example - to be paid for in advance. These expenses that are paid for in advance are known as pre-paid expenses. Knowing how to account for pre-paid expenses involves firstly an understanding of some key accounting principles, followed by the recording of a few simple journal entries. | When running a business, it is very common for multiple expenses - rent and insurance, for example - to be paid for in advance. These expenses that are paid for in advance are known as pre-paid expenses. Knowing how to account for pre-paid expenses involves firstly an understanding of some key accounting principles, followed by the recording of a few simple journal entries. | ||
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== Steps == | == Steps == | ||
===Understanding Pre-Paid Expenses=== | ===Understanding Pre-Paid Expenses=== | ||
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#*This concludes the process of accounting for a pre-paid expense, since the expense was gradually used up over the course of the year. | #*This concludes the process of accounting for a pre-paid expense, since the expense was gradually used up over the course of the year. | ||
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== Tips == | == Tips == | ||
