The journal entry credits the prepaid asset account (on the balance sheet) and debits the expense account (on the income statement). The records will reflect that incurred expense for the period, which will reduce the prepaid asset by that amount. What is the Effect of Prepaid Expenses on...
As the amount of prepaid insurance expires, the expired portion is moved from the current asset account Prepaid Insurance to the income statement account Insurance Expense. This is usually done at the end of each accounting period through an adjusting entry. Example of Prepaid Insurance To illustrat...
Which is more popular among young people, prepaid or postpaid? Young people often prefer prepaid plans due to the low entry requirements and flexibility to change services as needed. 7 What are the main benefits of a prepaid plan? Prepaid plans offer controlled spending, no debt risk, and fle...
Business transactions are usually recorded in two places. This is known as the double entry bookkeeping system, which is based on the concept that every transaction has an equal and opposite effect in two different places. For example, a purchase increases the company’s assets in terms of the...
Carding is a form offraudwhere stolen credit or debit card information is used to charge prepaid cards, purchase gift cards, or assist other schemes. Stolen cards can be used to purchase store-branded gift cards, which can then be sold or used to purchase other goods that can be sold for...
What Is the Payroll Process? A payroll administrator needs to do detailed planning of the whole payroll process. There is always work managing ongoing tasks that need attention and constant monitoring of changes to tax withholding, contribution, and other things to consider in the process. ...
prepaid insurance policy, accountants will debit an expense account and credit prepaid insurance. Companies will recognize insurance expense each month using this process, creating an even flow of expenses and net income. This entry is most common for those companies using the accrual accounting ...
has monetary value. Prepaid expenses are also considered a current asset because they can be easily liquidated—the value can be realized or converted to cash in one year or less. However, every asset has a cost. The value of the prepaid asset is offset by the cost of the expense in eac...
What is the purpose of the Income Summary account? What type of accounts normally have debit balances and credit balances? What are the two primary interrelationships between the balance sheet and the income statement? What type of account is prepaid expense?
What Are the Best Tips for Managing Prepaid Expenses? What Is an Entry Bond? What is a Deferred Expenditure? What are Tax Expenses? What is Deferred Income Tax? What is a Deferred Account? Discussion Comments WiseGeek, in your inbox