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What is the difference between Accrued and Prepaid Expense?

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Question ajoutée par Muhammad mohsin saleem , General Accountant , Al Ghadeer Modern Trade Enterprises
Date de publication: 2014/03/19
Mir Mujtaba Ali
par Mir Mujtaba Ali , Internal Audit Manager , Confidential

Prepaids and accruals relate to the services and goods a company receives from its vendors for which payment has been or will be made. Prepaid expenses are the advance payments for goods and services that are to be used up in the future and are classified as an asset on the balance sheet, while expense accruals are liabilities, amounts that have been incurred but have not been paid by a period's end.

yousaf Hussain
par yousaf Hussain , Audit Officer , Albaraka Bank Pakistan Ltd

Accrued expenses are those which are yet to be paid but the benefit associated to them is acquired already.

we treat them as liability which has to be paid. 

Prepaid expenses are those which are paid in advance but the benefit associated to them is not acquired yet. we treat them as assets. 

Shenouda Geris
par Shenouda Geris , Group Finance Manager , Shore_ventures( Mashkore App- Al Zubda App- Poltics Co)

Accrued Expenses : Expenses that have accrued but not yet paid or recorded

1- it's recoed as current liablites 

2- Example ( Wages - rent  - electrical payable -Interest )

    DR   wages Expenses 

          CR   Wages Payable

Prepaid Expense : Expenses amount paid in cash before the benefit received .

1-it's record as current assets

2- Example ( prepaid Insurance - Advertising -Supplies )

  DR    Prepaid

      Cr   Cash 

 

 

 

 

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