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    t prepayment of the yearly rent, but a rental deposit would be tied in with certain contract obligations and not be an
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    Prepaid expenses belong on the balance sheet and can encompass costs such as rent, insurance, advertising, and any other cost that normally would be expensed on your income statement but is paid in advance of the period in which it is owed. Prepaid expenses differ from deposits as they will be used up within a specific period (usually within a year) as a deposit could be carried until the end of a contract when ever that might be. For example, prepaid rent would be an upfront prepayment of the yearly rent, but a rental deposit would be tied in with certain contract obligations and not be an a
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    r cost that normally would be expensed on your income statement but is paid in advance of the period in which it is owed. Prepaid expenses differ from deposits as they will be used up within a specific period (usually within a year) as a deposit could be carried until the end of a contract when ever that might be. For example, prepaid rent would be an upfront prepayment of the yearly rent, but a rental deposit would be tied in with certain contract obligations and not be an
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    . Prepaid expenses differ from deposits as they will be used up within a specific period (usually within a year) as a deposit could be carried until the end of a contract when ever that might be. For example, prepaid rent would be an upfront prepayment of the yearly rent, but a rental deposit would be tied in with certain contract obligations and not be an
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    posit could be carried until the end of a contract when ever that might be. For example, prepaid rent would be an upfront prepayment of the yearly rent, but a rental deposit would be tied in with certain contract obligations and not be an
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    t prepayment of the yearly rent, but a rental deposit would be tied in with certain contract obligations and not be an actual expense until the end of the contract.

    Should you, for example, pay for your yearly insurance premium in one lump sum then you would charge this premium to an account called Prepaid Insurance. The entry would be:

    Debit: Prepaid Insurance Expense $(amount of yearly premium)

    Credit Accounts Payable or Cash $(amount of yearly premium)

    (Depending on method of payment)

    Each month a general journal entry would be made expensing one month’s premi

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