prepaid expenses

Deferred Charge

An asset on a balance sheet that comes about from a business making payment for a good or service it has not yet received, but will in the near future. Prepaid expenses are expensed over time as the goods or services are received. A common example of a prepaid expense is an insurance policy. Another example is a lump sum payment for rent; if a company pays for a year's worth of rent in advance, it is recorded as a deferred charge. A deferred charge is also called a prepaid expense.

prepaid expenses

Expenses that represent goods or services delivered over a period of time,but which are paid in a lump sum at the beginning of that time period.If one paid $12,000 for an insurance premium on property for one year,that $12,000 would be entered on the accounting records as a $12,000 asset called prepaid insurance expense.Each month the property owner would reduce the asset account by $1,000 and show a corresponding $1,000 expense for that month for insurance. At the end of the year,the prepaid expense account would be $0 and the books and records would show $12,000 worth of total insurance expenses.When conducting the due diligence to purchase an income-producing property,the potential buyer should inquire about the handling of expenses for which the seller receives bills only a few times a year.Sometimes,such expenses never show up on the monthly profit and loss statements, but are artificially placed in something called the thirteenth month accounting period.

Prepaid Expenses

Prepaid expenses are expenses that are paid in advance. Cash-basis as well as accrual-basis taxpayers usually are required to capitalize prepayments for rent, insurance, etc. that cover more than one year. Deductions are taken for the period during which the benefits are received.
References in periodicals archive ?
But differences between the cash basis and accrual basis for expense recognition purposes are represented by amounts in accounts such as prepaid expenses (payment before expenses are incurred) and various accrued or payable accounts (payment after expenses are incurred).
Request for Accounting Method Change for Prepaid Expenses Denied
Prepaid expenses present another planning opportunity although this is an area where financial reporting and tax planning may conflict.
Disclosures Related Primarily to the Statement of Financial Position (includes examples of investments, contributions receivable, other receivables, inventory and prepaid expenses, collections, fixed assets, liabilities and net assets)
88 billion yen in write-offs connected to long-term prepaid expenses and 1.
If a buyer purchases a $150,000 home using a traditional FHA fixed-rate mortgage, they would have to shell out $4,300 for the down payment and $4,200 for closing costs and prepaid expenses.
Current assets include accounts receivable, inventory and prepaid expenses.
95M in cash and $305,000 in prepaid expenses as of March 31, 2010, the end of the reporting quarter.
681) investments Depreciation and amortization 667 719 Loss on disposal of fixed asset 11 1 Changes in operating assets and liabilities: Accounts receivable, net (111) 5 Other receivables 1 (105) Receivable - affiliates 47 (15) Prepaid expenses and other (99) 12 Other assets (8) (34) Accounts payable 99 (171) Accrued expenses 163 (277) Deferred revenues (4%) 375 Deferred lease costs (49) (75) Net cash provided by operating activities 1.
The deterioration was also caused by 3,882 million yen in write-offs connected to long-term prepaid expenses and 359 million yen in appraisal losses on its securities holdings, Chugai said.
03M in cash and $313,000 in prepaid expenses as of December 31, 2009, the end of the reporting quarter.
960 Accounts receivable, net 284 173 Other receivables 322 323 Receivable - affiliates 36 83 Prepaid expenses and other 625 532 Total current assets 12.