2.Prepaid insuranceis insurance paid in advance and that has not yet expired on the date of thebalance sheet. Initial journal entry for prepaid insurance: Adjusting journal entry as the prepaid insurance expires: Prepaid Expenses Example We will look at two examples of prepaid expenses: Example #...
This is because the initial journal entry is debited to the related account (i.e. prepaid rent or prepaid insurance) and then credited as cash. These two asset accounts leave the balance sheet unaffected. But, once the amortization schedule kicks in during each respective accounting period, ...
Let’s assume your business purchases insurance for 8 months for $800. To create the journal entry for this transaction, first, you have todebit the Prepaid Insuranceaccount for $800. Why? Because prepaid insurance is an asset account, and as we mentioned, assets are increased by debits. Th...
These are the journal entries used to represent the realization of the prepaid expenses: Debit: Expense Account Credit: Prepaid Expense Account (Asset) Common examples of prepaid expenses in accounting Any expense paid in advance can be considered and recorded as a prepaid expense. These are so...
You may run across a prepaid expense situation where the amount you're prepaying is relatively small. Rather than go to the trouble of making an unexpired expense or unexpired insurance journal entry, simplyrecord the small prepaid expense as an expense from the start. You can do this with ...
Alex Groth, Journal Sentinel, 4 Apr. 2024 Other options may be prepaying upcoming expenses for the year, such as software services, insurance plans and IT services. Rina Mehta, Kansas City Star, 24 Jan. 2024 Savers can spend hundreds, not thousands of dollars initially, to prepay just one...
What Are Some Examples of Prepaid Expenses? Businesses make a number of prepaid expenses: Advertising Bulk orders of supplies Insurance Interest Legal retainers Rent and leases Salaries Taxes Why Is It Necessary to Record Prepaid Expenses? It’s important to record prepaid expenses because a business...
百度试题 题目MAKE ENTRY FOR THE FOLLOWING TRANSACTION. Prepaid insurance expense, $40,000.相关知识点: 试题来源: 解析 Prepaid insurance 40,000 Cash in Bank 40,000 反馈 收藏
Common examples of prepaid expenses include leases, rent, legal retainers, advertising costs, estimated taxes, insurance, salaries, and leased office equipment.常见的待摊费用包括租赁费、租金、律师聘用费、广告费、预估税款、保险、员工工资和租赁办公设备。The Bottom Line 结论 Prepaid expense is an ...
A prepaid expense is a good or service that has been paid for in advance but not yet incurred. Common examples include rent, insurance, leased equipment, advertising, legal retainers, and estimated taxes. In business, prepaid expenses are recorded as assets on the balance sheet because they rep...