During the accounting cycle, prepayments form one part of the adjusting entries. After the draft trial balance is extracted, the bookkeeper will then look for adjusting entries like prepayments to be expensed off into the Income Statement?
Continue reading about What Is Prepayments And Its Accounting Treatment(s)
Prepayments are expenses paid in advance and the unexpired up is accounted as current assets in the Balance Sheet.
Vice versa, revenues received in advance are payment received from customers for work not yet done or goods to be delivered at some future date.
So how do we treat revenues received in advance?
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