WHAT ARE PREPAID EXPENSES? BASIC ACCOUNTING TERMS. ACCOUNTING.

WHAT ARE PREPAID  EXPENSES? BASIC ACCOUNTING TERMS. ACCOUNTING.

Transcript

00:00Hello guys, this is Sonia Sethia, your accounts and equity tutor.

00:04Basic terms we were doing for class 11th account students.

00:078th number we have prepaid expense.

00:09Prepaid expense is an expense that you have given in advance but you have not received its benefit yet.

00:15Let's take an example.

00:17Suppose you paid a rent of 1 year 50,000 on 1st October 2017

00:23and that financial year, accounting year is ending on 31st March 2018.

00:28It means rent of 6 months of 25,000 is related to this financial year.

00:341st October to 31st March is related to this year which you will show as expense in profit and loss.

00:41But the 25,000 you have given in advance for next year 6 months,

00:45you call that prepaid expense which you will show in balance sheet

00:50under the head current assets which you will name as prepaid expense.

00:55I have given the telegram link in the description.

00:57You will get all the notes and videos there.