A prepaid expense account is an asset, thus not a temporary account either.
A prepaid expense account is an asset, thus not a temporary account either.
A prepaid expense account is an asset, thus not a temporary account either.
A prepaid expense account is typically referred to as a "prepaid expense" or "prepaid asset." This account represents payments made in advance for goods or services that will be received in the future. As the benefits of these expenses are realized over time, they are gradually expensed on the income statement.
No, a reduction in prepaid expenses is not a debit; it is a credit. Prepaid expenses are initially recorded as assets, and when they are utilized or expire, they are reduced through a credit entry, which reflects the expense incurred. This adjustment decreases the prepaid expense account and increases the corresponding expense account.
Dr: Prepayment to Suppliers (In Case of Expense, then "Prepaid expense" account will be debited e:g Prepaid Rent) Cr: Bank/Cash
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.
asset, debit
No, it is a real/permanent account. Insurance expense is a nominal account.
When paying rent in advance, the entry involves debiting the Rent Expense account and crediting the Cash account. This reflects that you are incurring an expense for the future period while reducing your cash balance. If you are recording it as a prepaid expense, you would debit the Prepaid Rent account instead of Rent Expense, and still credit Cash. This distinction depends on how you choose to recognize the expense in your accounting records.
Prepaid expense is personal account in nature and default normal balance is debit balance and shown under current asset in asset side of balance sheet.
Because it will be transferred to an expense account....debit must equal credits on the j/e
these are those expenses which have been paid in advance. it means that these expenses,though not related to the current year,have been included in the expenses of current year. so in order to show a true and fair view,we have to deduct such prepaid expenses from the original expenditure as they are belonging to the next year. the entry is (for example) prepaid insurance dr to insurance a/c cr