Prepaid Expenses

What are Prepaid Expenses?

Prepaid Expenses represent all the payments made for expenses not immediately recognized on the income statement. Common examples of prepaid expenses include prepaid rent, insurance and interest. Prepaid expenses represent cash that has been paid out, as opposed to other current assets, such as receivables, where cash is expected to be received.

What do Prepaid Expenses include?

  • Any prepaid expenses arising from ordinary business courses,
  • Prepaid insurance;
  • Prepaid rent; and
  • Prepaid taxes.
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