How to record Prepaid Expenses

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Learn accounting with us today ➡️ https://www.theaccountingstudent.co.uk • HOW TO RECORD PREPAID EXPENSES? • Prepayments play an important role to make sure that the financial records show an accurate and objective reflection of an organisation and its activities. A prepaid expense is where the amount paid is higher than the amount of the expenses used. As a result the advanced payment needs to be deducted from the amount paid to arrive at the amount to be transferred to the profit and loss account. This treatment follows the principle for prepayments, whereby accruals you add and for prepayments you deduct. • This video will help you with questions such as how to record prepaid expenses, what is the journal entry of prepaid expenses, what are the two methods for recording prepaid expenses, how do you record prepaid expenses in profit and loss account, how to record prepaid expenses journal entry, how to record prepaid expenses in balance sheet, which account does not appear on the balance sheet, prepaid expenses in profit and loss account, prepaid expenses in balance sheet, prepaid expenses adjustment entry, prepaid expenses assets or liabilities, prepaid expenses current asset. • MUSIC CREDIT • ‪@benfrydrums‬ • DISCLAIMER • Our content is to be used as an EDUCATIONAL TOOL that aims to provide a foundation for individuals to learn financial accounting, management accounting and bookkeeping topics as practiced in the United Kingdom. As a result, not all complexities are shown or provided. Examples may include but are not limited to; differences between financial reporting, accounting standards or tax treatments. We are NOT ENGAGED in the providing of accounting, bookkeeping, financial, investment, tax, or other professional services. You should consult with a qualified or professional such as an accountant, business advisor, investment specialist, lawyer, solicitor, etc., with regards to specific facts and situations. • #prepaidexpense #prepaidexpenses #prepayments

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