Monday, December 28, 2009

Prepaid Expense Journal Entries

Companies will purchase many different types purchases for types of assets that will deliver benefits throughout the year. Journal Entries will keep track of how these assets are bought and how they will be used.

This will ensure that the general accounting ledger is accurate and the accountant knows exactly what types of assets that the company actually owns/

Chart of Accounting Journal Entries:


Type of Journal Entry
Account titles
Debit
Credit
Purchase and advance payment of a short-term asset that will be used up in under a years period of time. The purchase is made with cash.

For example, prepaid rent, prepaid insurance, prepaid advertising, and supplies
Prepaid Account
Cash
Accounts Payable
XXX

XXX
XXX

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