A presentation on prepaid expense

1. Bangladesh University of Professionals
Accounting and Information Systems
Md. Halimuzzaman Himel
Roll:18211026
Section : B
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2. PREPAID
EXPENSE
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3. What is Prepaid Expense?
Prepaid expenses represent payments made for expenses which have
not yet been incurred.
In other words, these are "advanced payments" by a company for
supplies, rent, utilities and others that are still to be consumed.
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4. Prepaid Expense –what are they?
Expense on income statement?
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5. Prepaid Expense –what are they?
Assets on the Balance Sheet.
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6. Examples of Prepaid Expense
Prepaid Rent
Prepaid Fees
Prepaid Subscriptions
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7. Prepaid Expense – Other Examples
• Supplies are prepaid expense .
-have future benefits
Become
Expenses
when used
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8. Prepaid Expense – Other Examples
Insurance
Companies purchase insurance to protect themselves
from losses due to fire ,theft and unforeseen events.
Insurance must be paid advance and recorded as an
increase in the asset account prepaid Insurance. At the
financial statement date , company increase Insurance
expense and decrease prepaid Insurance for the cost of
insurance that has expired during the period.
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9. How prepaid Expenses are recorded?
• ADC company prepay rent for 3 months in advance on 1st April. Rent
is 9000$ .
How they record it ?
On 31st April
Date Particulars Debit Credit
1st April Prepaid rent 9000
cash 9000
Date Particulars Debit Credit
31stApril Rent expense 3000
Prepaid rent 3000
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10. THANK YOU
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