Prepaid Expense

Last Updated: Jun 7, 2019

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A Prepaid Expense is an asset on the Balance Sheet as a result of a company making payments on goods/services to be received in the near future. An example of expensing prepaid expenses would be if a company had a one-year insurance policy cost of $1,200. As each month elapses, $100 of prepaid insurance would be expensed on the Income Statement until the account is empty at the end of the year.