Answer / h.r. sreepada bhagi

Amount paid in advance in an accounting period for a service
to be received in a future accounting period is Prepaid
Advance. Since payee owes money or moneys worth (service) as
on the date of Balance Sheet at the end of that accounting
period, it's an asset.

When payment is made for future expense in advance the
entry is to :-
Debit Prepaid Expenses A/c, and
Credit Bank or Cash A/c.

In the future accounting period to which the expenses
relates, the entry will be :-
Debit Expenses A/c, and
Credit Prepaid Expenses A/c.

Answer / sanj

Prepaid expenses is the expenses paid in advance for the
next year.Currently we are accounting current profit and
losses. The services agaisnt this payment will be in next
year so payment of this should be counted in next year.

Answer / govinda_mahato05

Prepaid expenses is the expenses for which we paid the money in advance for that expense. But actually this expenses will not have occurred at the time of payment. However this prepaid expenses adjust at the time of happening this expenses in actual.

Answer / shamim

because this exp has to pay in advance but did not get
service from whom pay the money thats y it is current asset

Exp a/c dr
prepaid exp. a/c

how to show provident fun in balance sheet

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Manoj & Mahavir joined a firm drawing salary of Rs 25000 per month.After serving 3 yrs ,they started business of their own in partnership,contributing Rs200000(expected life 10 yrs,bought spare parts worth Rs 33000 from Kundu on credit.Office supplies were purchased for cash.Initially they were very busy in conducting their business operations but by the end of the 1st year,31/12/2005 they were disappointed when they found their bank balances.Following is the summary of their bank statement. Receipts: Share Capital Rs 250000 Collections from Customers 412000 Payments: Equipment 200000 Salaries of Assistants 88000 Rent advance for 2 yrs 96000 On-year ins. Policy on equipment 12000 Office stationery 27000 Payment to Kundu 29000 Withdrawals of Manoj 90000 Withdrawals of Mahavir 90000 Closing balance c/d 30000 ----------- Total : 6,62,000 Still amount receivable from customers for services to them amounted to Rs 30,000 & closing balance of office stationery is Rs2000,spare parts Rs2600 were utilised by the end of the year .Prepare trial balance with the available information and show total. Also what is the net profit.

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