What is a prepaid expense adjustment?

What is a prepaid expense adjustment?

Many people may know or have heard of some advance payment expenses That is the cost of the business that has been paid in advance. The prepaid expenses will be paid before receiving the service. or received but not complete Any remainder of this accounting period's expenses will be carried forward as expenses for the accounting periods following this period. Classified as current assets

How to improve prepaid expenses

- Record all page expenses as assets on the day they are paid.

Transactions can be made as follows: Record as debit = prepaid expenses that are assets in the balance sheet and credit = cash to be posted on the end of the accounting period where some services have been used. by deducting the advance expenses of the part that has already been used. and record to receive that is the cost instead

Recorded as Debit = prepaid expense on the income statement and Credit = prepaid expense.

- Record all expenses as items in the income statement.

Transactions can be made as follows: Record as debit = advance expenses that are expense items in the income statement and credit = cash by posting on the end of the accounting period where services have been partially used and there are still services left. incomplete in order not to cause the perception of expenses that are too high Adjust expenses to show only expenses that exist in this accounting period. Then list the portion of services that have not yet been received in the prepaid expenses list as debit = prepaid expenses as a balance sheet asset and credit = expenses.

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