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Definition of prepaid expense - 2 dictionary results
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Financial Dictionary

Prepaid Expense

An asset that arises on a balance sheet because of the payment of something in advance (prepayment). Services for the payment will be received in the near future.

Investopedia Commentary

The premium paid to have fire or theft insurance for your business is an example of a prepaid expense.

Related Links

Reading The Balance Sheet

See also: Asset, Balance Sheet, Current Assets, Deferred Charge, Expense, Prepayment

Investopedia.com. Copyright © 1999-2005 - All rights reserved. Owned and Operated by Investopedia Inc.
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Tracfone Deals at Walmart
Save Money On Wireless Phones With Unbeatable Prepaid Prices.
Walmart.com
PhoneOracle
America's #1 Wireless Wholesale Provider and Distributor
www.Phoneoracle.com
Financial Dictionary

prepaid expense

An expenditure for an item that will provide future benefits. For example, a firm may pay an insurance premium only once a year, resulting in an expense that provides benefits throughout a 12-month period. The unexpired part of the premium is carried on the firm's balance sheet as a prepaid expense.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
Cite This Source
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