How to record Prepaid Expenses?

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HOW TO RECORD PREPAID EXPENSES?
Prepayments play an important role to make sure that the financial records show an accurate and objective reflection of an organisation and its activities. A prepaid expense is where the amount paid is higher than the amount of the expenses used. As a result the advanced payment needs to be deducted from the amount paid to arrive at the amount to be transferred to the profit and loss account. This treatment follows the principle for prepayments, whereby accruals you add and for prepayments you deduct.

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