Glossary
Prepaid expense
A prepaid expense is an amount you pay today for a service you will use over coming months, such as a year of rent or insurance.
What it means for a shop owner
It is first recorded as an asset, then turns into an expense month by month. Do not charge the whole amount to one month profit. This avoids artificial swings in reports.
A worked example
You pay 12 months rent of 7200. Each month you record 600 as expense, and the asset falls from 7200 to 6600, then 6000.
Related
Try it in your shop, free, no card.
The free plan: the whole shop for one branch, an offline cashier with stock, debts and accounting, with a daily limit on invoices, expenses and purchase orders. What it includes