Prepaid Expense
/ˌpriːˈpeɪd ɪkˈspɛns/
Definitions
- (n.) An advance payment made for goods or services to be received in the future, recorded as an asset until incurred as an expense.
The company recorded the insurance premium as a prepaid expense until the coverage period began.
Forms
- prepaid expenses
Related terms
See also
Commentary
Prepaid expenses are initially capitalized as assets and expensed over time, reflecting the matching principle in accounting and legal financial reporting.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.