top button
Flag Notify
    Connect to us
      Facebook Login
      Site Registration Why to Join

Facebook Login
Site Registration
Print Preview

What is the difference between a deferred expense and a prepaid expense?

+1 vote
2 views
posted Jun 30 by Diya Borda

Share this question
Facebook Share Button Twitter Share Button Google+ Share Button LinkedIn Share Button Multiple Social Share Button

1 Answer

0 votes

Often the term deferred expense indicates that a payment was made more than one year before the cost is expensed. This deferred expense will be reported on the balance sheet as a noncurrent or long-term asset.

Often the term prepaid expense indicates that a payment was made less than one year before the cost is expensed. This prepaid expense is reported as a current asset.

Sometimes an accountant does not intend for there to be a difference. For example, an accountant might say that part of a company's six-month insurance premium should be deferred to the current asset account Prepaid Insurance. Accountants also state that any prepayment of a future expense will result in an adjusting entry known as a deferral.

answer Jul 1 by Mukul Chag
Contact Us
+91 9880187415
sales@queryhome.net
support@queryhome.net
#470/147, 3rd Floor, 5th Main,
HSR Layout Sector 7,
Bangalore - 560102,
Karnataka INDIA.
QUERY HOME
...