Insert surname2 Professor’s name Student’s name Course title Date Adjusting entries Pre
Pre paid expenses is a type of crucial adjusting entries this is representation of payments of commodities that have not been obtained. Companies like for example when one is paying rent for the next six years this is money that have been presented but it has not been used. If anything happens in between before the end of the six months then the filing of the pre paid expenses happens. Pre paid expenses is important because one records the financial situation of an organization with alot of accuracy.
One is supposed to match the rent with the money one earns that month as far as the principle of matching is concerned. This adjusting entry then the pre paid expenses is recorded as an asset before e spending the month in the house. But when you actually complete the month in the house then it means you have used the money this is then marked as expense (Weil, Roman, Katherine & Jennifer, 2013).
Weil, Roman L., Katherine Schipper, and Jennifer Francis. Financial accounting: an introduction to concepts, methods and uses. Cengage Learning, 2013.