A prepaid expense is an asset listed on the balance sheet.
Prepaid taxes and equipment are asset accounts, so would normally have a debit balance. Rent expense is an expense account, so would normally have a debit balance. Liability, equity, and income accounts normally have credit balances.
Prepaid insurance would be an asset. Insurance expense is when the insurance has been used up, thus making it an actual expense on the Income Statement. Whereas Prepaid Insurance on a Balance sheet is classified as an Asset.
Dr. Prepaid expence (balance sheet) Cr. Expense (income statement) e.g. you have already paid $1200 insurance, but at year end still have six months to go until you have to renew your premium. You would have expensed the full $1200 - now you need to remove the unused (prepaid) portion. Dr. Prepaid expense $600 Cr. Insurance $600
Prepaid Income is considered current liability as it represents the advances received from customers on account of work to be performed.
It appears at: Income statement Balance sheet
Prepaid taxes and equipment are asset accounts, so would normally have a debit balance. Rent expense is an expense account, so would normally have a debit balance. Liability, equity, and income accounts normally have credit balances.
Prepaid insurance would be an asset. Insurance expense is when the insurance has been used up, thus making it an actual expense on the Income Statement. Whereas Prepaid Insurance on a Balance sheet is classified as an Asset.
Prepaid expenses are not part of income statements, in accrual accounting income and expenses are only shown in income statements when they are actually incurred.
Inventory is part of Balance sheet as well as income statement. Inventory is shown as an asset in balance sheet and as an expense when used in income statement.
YES
Dr. Prepaid expence (balance sheet) Cr. Expense (income statement) e.g. you have already paid $1200 insurance, but at year end still have six months to go until you have to renew your premium. You would have expensed the full $1200 - now you need to remove the unused (prepaid) portion. Dr. Prepaid expense $600 Cr. Insurance $600
Balance sheets are ordinarily projected after income statements because the firm's growth in retained earnings, an outcome of projected income, is a required input for the balance sheet.
Prepaid Income is considered current liability as it represents the advances received from customers on account of work to be performed.
It appears at: Income statement Balance sheet
Electricity is not part of balance sheet rather it is an expense and it is shown in income statement of business as expense.
prepaid insurance is shown under cash flow from operating activities as reduction of cash flow or cash outflow.
Matching expense with Income in the correct period. This the matching principal. Recording a prepaid expense and then expensing it periodically is one example.