Prepaid Expenses Policy

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Standards and Procedures for Identifying and Recording Prepaid Expenses

This tool contains two sample policies that establish standards and procedures for identifying and recording organizations’ prepaid expenses in the general ledger in compliance with management’s objectives.

Prepaid expenses represent amounts that have been paid but the related service or benefit due that the company has not yet received. Examples of types of expenses include advertising, deposits, insurance premiums, lease payments and rent. These samples also outline the roles and responsibilities for recording prepaid expenses and provide an example that illustrates the process of a prepaid expense gradually becoming an expense.

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