Pre-paid expenses are a type of assets on the balance sheet that results from a business making advanced payments for goods or services to be received in the future. Prepaid expenses are usually recorded as current assets and the value of the prepaid expenses is expensed over time as the goods or services are utilized for business activities.
A common example of a prepaid expense would be insurance premiums that are paid annually. At the end of the fiscal year, any amount of insurance premium related to the fiscal year would be expensed, but the insurance premium related to the upcoming fiscal year will be accrued as prepaid expenses that will be expensed until the period of insurance has ended.
If you have any questions regarding Prepaid expenses, please don’t hesitate to get in touch with us. Shajani LLP Chartered Professional Accountants and Advisors have a team of Calgary Accountants, Edmonton Accountants and Red Deer Accountants ready to assist you in your personal and corporate tax filings and tax planning strategy.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2021 Shajani LLP.
Shajani LLP is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning services.