Question

Give one word/term or phrase for each of the following statements.

Expenses paid for unexpected period.

Answer 1

Expenses paid for unexpected period- Prepaid expenses

Explanation:
Prepaid expenses are those expenses that have been paid in advance for the next year during the current year. Prepaid expenses are the assets of a business and shown under the head of Current Assets because the benefit from them will accrue in the future. These expenses are also deducted from the concerned expenses on the debit side of the Trading and Profit and Loss Account. For example, insurance premium of Rs 6,000 is paid on June 30, 2013 for one year. Books are closed on 31st March every year. Thus, Rs 1,500, which belongs to the period from April 2014 to June 2014, will be regarded as insurance premium paid in advance or prepaid expenses.