Prepayments

Prepayments are classified as current assets in the balance sheet. Prepayments include prepaid expenses for services not yet used, for example rent in advance or electricity charges in advance, and also accrued income. Accrued income relates to sales of goods or services that have occurred and have been included in the profit and loss account for the trading period but have not yet been invoiced to the customer.

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

Tags: