Accounting Dictionary - Letter P

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Prepaid expenses
(also called prepaid assets) are expenses paid in cash and recorded as assets before they are used or consumed. Prepaid expenses are usually shown in the assets section on the balance sheet. Prepaid expenses are normally current assets, but can be non-current assets as well. Examples of prepaid expenses are insurance premiums paid before or at the beginning of the insurance coverage period or rent payments made before or at the beginning of the lease term.
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