Is Prepaid Expense a Current Asset
The income statement for the quarter ending will show an expense of 2000 under the line item of Insurance Expense. In the accrual accounting system the accountant records the expense in the period it occurs. Accounting Methods Accounting Play Balance Sheet Balance Sheet Template Accounting Basics A deferred expense refers to a cost that has occurred but it will be reported as an expense in one or more future accounting periods. . These cookies are set by embedded YouTube videos. The realization of benefits by the customer. Theyre assets because you benefit from them in the future usually within 12 months. The 12-month rule allows taxpayers to deduct prepaid expenses in the current year if the asset does not go beyond 12 months from the date of the payment or the end of the tax year following the. A business has an annual premises rent of 60000 and pays the landlord quarterly in advance on the first day of each quarter. The
