Expenses already incurred but not necessarily for the current accounting period is prepaid expense. In the case of advance, the expenses even though identified, have not been incurred but only cash has been taken out for the purpose of incurring such expense.
There isn't much of a difference between a prepaid expense and a deposit. Both terms are monies that are paid in advance to pay for something. With a prepaid expense, the money pays usually for a bill or utility. A deposit on the other hand, is sometimes given back after the obligation is paid. If it is not paid, the deposit is kept as payment.
prepaid expense adjusting entries
It is a prepaid expense to be expensed over time. Not an intangible.
one covers all college expenses, while the other covers only tuition
Prepaid rent is monetary item, booked to the debit of the balance sheet account as an asset and expensed to the P&L through a monthly booking by crediting the balance sheet and debiting the P&L rent account ( recognising expense). It is important to prepare a schedule showing how you expense the prepayment till you get a zero balance at the end of period covered by the prepayment, that is when you must have charged the total amount to the P&L account. It is not good accounting practice to charge the total amount of prepaid rent to P&L account in one period. Cheers Ndimuh Cosmas
Expense is that amount benefit of which has already taken by company while prepaid expense is that amount paid the benefit of which not yet taken but available to be taken in future period.
Prepaid rent is an asset and represents and advance payment for a future benefit Rent expense is an expense and is the expended portion of the rent consumed.
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.
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.
There isn't much of a difference between a prepaid expense and a deposit. Both terms are monies that are paid in advance to pay for something. With a prepaid expense, the money pays usually for a bill or utility. A deposit on the other hand, is sometimes given back after the obligation is paid. If it is not paid, the deposit is kept as payment.
Expense is any cost that the firm incurs to earn the particular revenue. Most expense are required to be paid except for a few "non-cash expense" such as depreciation. Prepaid, as suggested, are expenses paid in advance but have not yet "used" to generate revenue. It is to be used at a later date. One example of a prepaid expense would be rent i.e. prepaid rent. The owner pays the rent for the next 2 months at $100 per month. Prepaid rent = $200.
When payment for insurance is made advance of actual expenses then it is called prepaid insurance which is asset for business until insurance benefit is utilized while insurance expense is actual insurance expense when insurance benefit is taken.
what is the difference between freight prepaid and freight prepaid abroad
There is no similarity between the assets and expense only prepaid/expired expenses is consider our assets.
Prepaid expense is measurable with objectivity, but deferred revenue expense is optional and subjective being based on judgment of the accountant. The latter is usually written off at the time of admission of a partner, unless a decision to the contrary is taken, but pre-paid expense cannot be written off till its benefit is consumed.
Life of the expense
[Debit] Prepaid Expense xxxxx [Credit] cash / bank xxxxx