Prepaid Expense

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Dictionary Says

Definition of 'Prepaid Expense'

A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received in the near future. While prepaid expenses are initially recorded as assets, their value is expensed over time as the benefit is received onto the income statement, because unlike conventional expenses, the business will receive something of value in the near future.
Investopedia Says

Investopedia explains 'Prepaid Expense'

Due to the nature of certain goods and services, they must be prepaid expenses. For example, insurance is a prepaid expense, because the purpose of purchasing insurance is to buy proactive protection in case something unfortunate happens. Clearly, no insurance company would sell insurance that covers the occurrence of an unfortunate event, after the fact, so insurance expenses must be pre-paid.

An example of expensing prepaid expenses would be if a company had a one-year insurance policy cost of $1200. As each month elapses, $100 of prepaid insurance would be expensed to the income statement until the account is empty at the end of the year.
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'Prepaid Expense'

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    ... in mind. Consequently, that may ultimately represent something like prepaid
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    ... year. They typically include cash and cash equivalents, short-term investments,
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    ... factory and equipment: while this depreciation is indeed a legitimate expense for
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    ... By definition, a prepaid tuition program won't cover every expense, so it should
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    ... The ETF is composed of 713 individual bonds, and it charges an annual expense
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    ... The ETF currently pays a 3.2% dividend yield and charges a 0.6% expense ratio. ... The
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    ... Room and board may be a qualified expense if the student’s attendance meets ... Withdrawals
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  • Get A Richer Picture With The Penman-Nissim Framework

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    ... Inventory, Long-Term Investments. Prepaid Expenses, Deferred Tax Assets. Property,
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