Month: March 2022

Accounting prepaid expenses are an important part of accounting because they affect the income statement, the balance sheet, the cash flow statement, and the tax liability of a business. Accounting prepaid expenses also help managers to plan, control, and evaluate the cash flow and working capital of a business. By amortizing prepaid rental expenses, you… Continue reading Is prepaid rent debit or credit?

The prepaid expense asset incrementally declines until the balance eventually reaches zero, at which point the benefit of the purchase has been fully realized. A deferred expense is an expense that is recognized over a period of time, not when it’s incurred. This is often the case with rent or lease payments, which are typically… Continue reading Rent Payments: Rent Payments: The Accounting Behind Prepaid Expenses

Adjusting entries in accounting are not just a mere formality but a critical practice for ensuring the accuracy of financial statements. These entries, made at the end of an accounting period, play a pivotal role in aligning the financial records with the actual financial activities of a business. This article delves into the world of… Continue reading Adjusting Entries in Accrual Accounting: A Definitive Guide For Businesses

Before diving into the normal balance of an account, it is essential to understand the types of accounts used in accounting. We’ve covered these in our prior lessons but we need to keep drilling these into your knowledge if you are just starting out. So for example there are contra expense accounts such as purchase… Continue reading Normal distribution Wikipedia