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Why there is decreasing in cash while increasing in prepaid expense?
MissM
Because a prepaid expense is a type of asset. Once you prepay insurance for example. You have an increase in this asset called "Prepaid Insurance", and thus a reduction in cash. Once the Prepaid Insurance is used up it decreases while the Insurance expense increases. This is called amortization.
Wiki User
∙ 16y ago
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.
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What the difference between expense and prepaid expense?
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.
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.
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.
What is the difference between prepaid insurance and insurance expense?
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.
Journal entry for income paid in advance?
Though I honestly never heard of a company paying a Salary in advance, the journal entry would be:Prepaid Salary (debit) $$$$Cash (credit) $$$$It would be like paying any other expense in advance, such as rent expense, insurance expense etc. You would debit a prepaid account for the amount while crediting your cash. Once the Salary is earned you would adjust the entry by Debiting Salary Expense and Crediting Prepaid Salary.
What the difference between prepaid and accrued expense?
A prepaid expense is an expense you pay before you have incurred an obligation to pay it. Paying three months rent in advance is an example. Prepaid expenses are viewed as an asset on the balance sheet which is reduced as the expense is incurred. For example, every month in which rent falls due would be a reduction of your prepaid rent asset and a recognition of an expense equal to the amount of the reduction. Accrued expenses, on the other hand, are essentially the opposite. For example, assume you didn't prepay your rent. As the rent expense is incurred, a liability is created. After you actually make your payment, the liability is reduced by the amount of your payment.
Is prepaid insurance reported on the income statement?
prepaid insurance is shown under cash flow from operating activities as reduction of cash flow or cash outflow.
What are the factors that influence the speed of the direct-current shunt motor with increasing load?
.The magnitude of the voltage and current of both the armature and shunt field coil. To decrease the speed when the load is increasing then increase the shunt field current while decreasing the armature voltage or current. To increase the speed while the load is increasing then increase the armature current while decreasing the shunt field current. The decreasing and increasing of these currents and voltages can be done by connecting a variable resistor in series or parallel with each of the armature and/or shunt field coil.
Does paper air plane wingspan increases glide distance?
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Is it possible for a mass to be speeding up while its acceleration is decreasing in magnitude?
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In a forest the number of rabbits with long hair is increasing while the number of rabbits of the same species with short hair is decreasing this is an example of?
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