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Prepaid Expenses

Example: A subscription for 1 yr is bought on 31st Dec for 12000. 3000 is for current year and 9000 for next year.

Then the invoice shall be passed as usual and accounting entries made as follows:

Prepaid expenses are an asset account.

Accounting vouchers required in addition to invoice entry:

31st Dec: Prepaid expenses Dr, Purchase Account Cr 9000

1st Apr: Prepaid expenses Cr, Purchase Account Dr 9000