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Salary paid in advance is not an expense because it neither reduces assets nor increase liabilites?
Wiki User
∙ 10y ago
- True: Salary paid in advance relates to the coming accounting period. It has nothing to do with the current period. Hence it is not taken in the Profit and Loss Account as an expense. It is shown as a Current Asset in the Balance Sheet.
DEEPTI BALU
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What is expense accrual?
Expense accurals is a liabilites
What are the five 5 accounting cycle defines?
cash expense revenue asset liabilites
What would be the effect of outstanding expense on accounting equation?
As we know, in accounting and book-keeping, expenses are debited in order to cause a decrease in the owner's (or stockholders') equity. So in this case, we record outstanding expense as: ASSETS = LIABILITES + CAPITAL Nil = +(outst. expense) - (outstanding expense) Outstanding Expenses are added to Liabilities because it is business' CURRENT LIABILITY and deducted from CAPITAL because it causes a decrease in owner's equity. NOTE: At the time of payment we deduct it from Liabilities as well as from Cash ( or in JOURNAL ENTRY: we debit Outstanding Expense and credit Cash) ASSETS = LIABILITES + CAPITAL -outst. exp. = -outst. exp. + Nil
What is the difference between prepaid expense and advance payment?
Prepaid expense is a payment which relevant to services which expected to delivered in the next accounting period, while advance expense is an expense paid in advance for services expected to delivered in the current accounting period.
Is an increase in rent expense a credit?
Rent expense has a debit balance as a normal balance so increase in rent will be shown by debit to rent expense.
What is expense accrual?
Expense accurals is a liabilites
What are the five 5 accounting cycle defines?
cash expense revenue asset liabilites
What would be the effect of outstanding expense on accounting equation?
As we know, in accounting and book-keeping, expenses are debited in order to cause a decrease in the owner's (or stockholders') equity. So in this case, we record outstanding expense as: ASSETS = LIABILITES + CAPITAL Nil = +(outst. expense) - (outstanding expense) Outstanding Expenses are added to Liabilities because it is business' CURRENT LIABILITY and deducted from CAPITAL because it causes a decrease in owner's equity. NOTE: At the time of payment we deduct it from Liabilities as well as from Cash ( or in JOURNAL ENTRY: we debit Outstanding Expense and credit Cash) ASSETS = LIABILITES + CAPITAL -outst. exp. = -outst. exp. + Nil
What is the difference between prepaid expense and advance payment?
Prepaid expense is a payment which relevant to services which expected to delivered in the next accounting period, while advance expense is an expense paid in advance for services expected to delivered in the current accounting period.
Is an increase in rent expense a credit?
Rent expense has a debit balance as a normal balance so increase in rent will be shown by debit to rent expense.
Why does expense account require a debit entry to increase equity?
A debit to an equity account, or in this case an expense account, will increase the expense account. An increase to this account means the more expenses you have. The more expenses mean the less money you earn and therefore you make less money in your income statement because revenues - expenses = income
How does prepaid expense and accrued expense affect the profit of a business?
it will either increase or decrease profit. Prepaid expense should increase profit as the amount has been overstated.
What is the difference between prepaid unearned account?
Prepaid is that amount of expense which is paid in advance and expense not occured while unearned account is that amount where amount for services received in advance but services not provided.
Is a legal expense considered a prepaid expense?
If legal expense paid in advance of rendering services then it is prepaid expense otherwise not. Also this company provides all the necesary steps. tarifcheck365.com
Why there is decreasing in cash while increasing in prepaid expense?
The decrease in cash is likely due to the prepayment of expenses, where cash is used to pay for future expenses in advance. This leads to an increase in prepaid expenses on the balance sheet as the expenses are prepaid but not yet incurred. Over time, as the prepaid expenses are used up, they are expensed and cash balances will start to increase again.
Does a depreciation expense increase or decrease cash flow?
Neither. Depreciation is a non-cash expense.
Is Cash Today more expensive than other "cash advance" companies?
I would say that they are about the same as far as expense goes. With any "cash advance" companies it could lead to more expense if they are not paid in time.
