Prepaid Subscription: When Is It an Expense? | Accrual Accounting
In this video, we explain how to account for a prepaid subscription, why it is not expensed immediately, and when a prepaid expense becomes an expense under accrual accounting. In Part 2, we build an amortization schedule in Excel, and in Part 3, we record journal entries and complete the adjustment process.
Recommended Videos — Prepaid Expenses Series
▶Part 2: Prepaid Subscription Amortization Schedule in Excel • Prepaid Subscription Amortization Schedule...
▶Part 3: Prepaid Expenses: From Journal Entries to Amortization Schedule • Prepaid Subscription Accounting: Journal E...
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The textbooks used in this video: Financial Accounting, Jan R. Williams. Publisher: McGraw-Hill. Chapter 4.
Timeline:
00:00 Introduction: Prepaid Expenses
00:40 Example - Prepaid Subscription
01:15 What Is a Prepaid Expense?
01:44 Are There Prepaid Expenses Under the Cash Basis of Accounting?
02:06 How Prepaid Expenses Are Reported?
02:34 Adjusting Entries to Recognize Prepaid Expenses
03:07 3 Steps to Record and Expense Prepaid Expenses
04:28 Recommended Videos and Playlists
Additional resources:
https://www.amsa-online.com/free-reso...
American Modern School of Accounting is a nonprofit online vocational school that offers several programs to help adult learners to start or advance their careers in bookkeeping and accounting.
We offer the following programs:
• Certificate in Computerized Accounting with QuickBooks
• Certificate in Computerized Bookkeeping with QuickBooks
• Certificate in Computerized Bookkeeping with QuickBooks (Budget Plan)
For more information, visit our website: https://www.amsa-online.com/
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