Prepaid expense
Something you paid for ahead of time, like annual insurance. Sits as an asset and is released to expense month by month.
In Solo Superstars
Categorize the payment to Prepaid Expenses and set up a schedule; the monthly release is then automatic and the year-end close catches anything left.
Example
$1,200 annual insurance: 1400 1,200 in January, then 100 per month to 6050 Insurance.
Codes shown are the defaults a new workspace starts with. Yours may be renamed or renumbered — check Accounting › Chart of accounts. See the full default chart.
Also called
- prepayment
- prepaid
Related
- 1400 Prepaid Expenses — Payments made in advance for something you will use later: annual insurance, a year of software, prepaid rent. An asset released to expense month by month.
- Prepaid schedule — The plan that releases a prepaid amount to expense evenly over its months, posting an adjusting entry each period.
- Adjusting entry — A journal entry made at period end to fix timing: an accrual, a prepaid release, depreciation. Not tied to a bill or invoice.
- Accrual basis — Counting revenue when you send the invoice and expense when you receive the bill, whether or not money has moved. The alternative is cash basis.