How Prepaid Expenses Work | Adjusting Entries
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- Опубликовано: 9 июн 2019
- 💥Adjusting Entries Cheat Sheet → accountingstuff.com/shop
🖊Adjusting Entry Practice Questions → accountingstuff.com/practice-...
Prepaid Expenses are one of the most common forms of Adjusting Entry in Accounting. In this video, you'll learn what a Prepaid Expense is, and I'll show how to account for them correctly, using Journal Entries and T Accounts.
I'm creating a whole mini-series devoted to this topic which will include worked examples for each of these four types of Adjusting Entry...
▪ Intro to Adjusting Entries → • Prepayments and Accrua...
▪ Prepaid Expenses → • How Prepaid Expenses W...
▪ Deferred Revenue → • Deferred Revenue Expla...
▪ Accrued Expenses → • Accrued Expenses Broke...
▪ Accrued Revenue → • Accrued Revenue MADE E...
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Prior to this channel, I used to score hardly 40 or 50 out of 100. But because of your videos with simple explanation, I scored 70 in Finance and 80 in cost accounting. My accounting basics are cleared than ever before. Even I started to teach accounts my friends. And You gained my interest in Accounting. And I have decided to go for CA exams.
BIG THANKS YOU AND KEEP GOING WITH THIS CHANNEL
Wow Rakesh, that is amazing! I'm glad to hear that it's all clicking for you. Thanks for your support and all the best with your CA exams. You'll crush them!!
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You take away all the stress of accounting school. Every time I’m a bit lost in my lectures, I have peace of mind knowing there’s a video of yours somewhere that’ll clear things up for me
That's great to hear! Hope it's all going well :)
Genuinely, please never stop making videos like these. You're inspiring so many future accountants. Props to you~
EXACTLY
i wish these videos existed when i was still a student! thank you for this good explanation!
No problem Erika, hope it helped :)
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Haha, perfect timing then! Cheers mate
Best Channel On RUclips For Accounting !
Thanks Faizan!!
Not everyone has a gift for teaching, but you do! Thank you SO much for helping me grasp this!!!
Thank you for this! I'm in a college accounting class right now, and am feeling so overwhelmed. I'm glad I found your channel!
No problem Zach! Sorry to hear that you're feeling overwhelmed, all the best!
Thats sad im im year 10 and looking at the same content
Same
accrual means already happened and inuccrual means its not yet ?
Hell yeah
Thanks for this video! When you said you were from Vancouver I was a little shook because I'm from there too, and I recognized the landscape you were driving in!
Ahh thank you so much for making these videos! I'm an online student so I practically have to self teach myself through the textbook which is miserable since I'm completely new to accounting. Your videos have honestly made it so much easier for me to understand new concepts. I really appreciate all the effort you put into these videos!!
Thanks Mina, these videos take a lot of work to put together so it makes me very happy to know that you're finding them useful. Good luck with your studies!
HOW the heck have I only discovered your channel just now?!
Lmao, kinda pissed me off, by myself HAHAHA
Really appreciate the simplicity of your teaching and videos.
Haha, thanks mate!
Your level of anger is nowhere close to mine. I was taking my accounting class in college when all these videos were posted already. Pulled an all nighter for the exam.
I'm only in high school but your videos are teaching me more than my teacher at the moment. Cheers mate!
No worries my young padawan. May the force be with you!
Amazing, now I understand why prepaid expenses are covered under an asset. The overall expense balance is carried for the annual period, and is being paid monthly to cover the overall expense. Once the annual period is done the expense should be at zero. Thanks for your content sir.
I love your teaching style. Brief, to the point, understandable, very clean lines. Thank you!
You're welcome :)
I just watched this video 3x, finally get it! I wish I had found these videos 3 weeks ago when I started my accounting class. This is lovely. Thank you!
Nice one Kellie! Great to hear that it's clicking for you!
I work for a nonprofit, and our CFO just left. I'm having to take over most of his functions and your videos are helping me so much!
That sounds like a tough situation to be in. Best of luck with it all!
I'm in review year in college and feelin like I haven't learned anything over the years. Going back to the basics and build it up from there. Your videos are very helpful. Thank you.
That's great to hear! It always helps to go back over the basics. Best of luck with it all :)
Thanks so much man. I'm planning to take on accounting and thanks to you, I have a leg up on the competition now! Vids so easy to understand. Keep it up! More power!
No worries Ejey, all the best!
You are the best. I'm not an accounting student but I've always wondered how to think of prepaid expenses. It's like you read my mind. Turns out there are answers to my problems! This could be the most useful video I've ever watched on youtube. Thank you very much.
Cheers Paul, hope it's all making sense for you!
What a simple ,effective and great video! thank you so much
I am new to accounting and I really love your videos, not only contentwise but also their technical quality is just amazing!
Thanks, I appreciate it!
Thanks James! I was looking in your channel for closing entries, but I couldn't find any videos. There is another topic you can cover in future videos :) Keep up the good work!
Hey Cesar, thanks for your suggestion. I'll keep closing entries in mind for future vids!
Wow, I just had an aha moment watching this. Thanks so much for your videos, they are my favorite since I found this channel last month :)
Gotta love those moments! Glad it's clicked for you :)
Omg you helped me understand adjustment from expenses to the prepaid account. I was stressing a hw problem all day. Thank you so much!
No worries, hope it's making sense
You are awesome! Great examples and visuals. Thank you so much for helping me get through my accounting class.
No problem Kat! Best of luck with your studies
Literally, how would I even make it through accounting without your channel? Thank you so much for being here and sharing your expertise!!!!
Great to hear that the vids are helping, all the best!
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The exam went well! Thanks for your tips. Great content as usual keep it up
Glad to hear it Patrick!!
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Cheers Michele!!
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Cheers Ahmed, I'm happy to help! All the best :)
Ur videos are such an awesome alternative for me like I wish u were my finance teacher
Good to see you back!
Cheers Aaron!
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Thanks Kulwant, I'm glad to hear that you are enjoying the videos!
the amount of effort you put in the video is amazing. Great quality videos. Keep them coming.
Thanks Bipul!!
This is SO helpful, thank you!
Thank you for the video, very informative as always. Some accountants in practice debit prepaid expenses and credit accrued expenses payable, then proceed to expense the prepaid expense as time passes, and debit the accrued expenses when they actually made the payments.
Dude...you are the BEST!!! I add your vids to my Watch Later list as my lecturer rambles online
Cheers Alex, all the best with your studies!
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Cheers!
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Thanks and cheers for your support!!
OMG you cannot imagine how I gain help from this. I'm not gonna lie that I actually studied in a university which is ranked within QS 50 rankings for accounting major. But STILL they don't really explain detailedly how the (insurance) expense will look like in the end. And you show the actual detail process to emphasize each time period, and show how is the final relationship between expense and cash and to cancel the prepaid expense etc. Maybe they think every university student is so super smart not to explain lol they just said DR Prepaid Rent with CR Cash & DR Rent Expense with CR Prepaid Rent.
Anyway I just want to say THANK U SO MUCH for saving time struggling.
Hey Astella, no worries! It's can be helpful to return to the basics from time to time. When studying at University I often felt like I was studying just to pass the exams. I could only remember things in the short term and once the exams were over I'd immediately forget 90% of it.
All the best!
i also just wanted to say, ur channel is one of the most valuable channel in my list. thank u for ur honest hardwork and dedication in giving value to us. this is the legit first time i don’t skip ads, it’s the least that i can do to thank u. keep up the good work man!! hope to see u someday in the field of accounting. 😀
Cheers Angelo, I'm happy to hear that you're enjoying the vids :)
Great video as usual! Please do a video on understanding financial ratios!
Cheers Mohammad, and thanks for your suggestion!
Thank you very much !!! your videos are very helpful.
THANK YOU SM TEACHER FOR CLEARING MY CONCEPTS ..
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Watching this video in 2022, it's been useful. Thank you for your amazing effort bro!
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Thanks for your kind words :)
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Thanks Nathaniel, all the best!
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No worries, best of luck with your course!
Thank yu for this ive been stuck for like a week trying to figure this out
No worries, glad it's making sense :)
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You're most welcome :)
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Thank you James, great work.
Cheers John :)
Thank you so much James!!! I finally understand what prepaid expenses are!
I always Google for knowing knowledge first but I search your channel for knowing accounting knowledge first like this time 😀
Fan from Taiwan 🇹🇼
(Btw really like your British accent!! Also a fan of British accent)
No worries Agnes! Glad it's making sense :)
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Thanks buddy :)
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Cheers, happy to help :)
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Thanks Connie!!
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No problem Kelly, it's great to hear that these videos are helping you out!
All the best with your course!
@@AccountingStuff thanks!
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No worries, hope you find it helpful!
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Thank you so much for all your help with these informative and entertaining videos! Would you be able to produce a video on the cash flow (operating, investing, and financing activities)?
Hey Ariella, no problem! I've actually made three videos covering the cash flow statement (including those three sections) that you can find in this playlist --> ruclips.net/video/Xy-yDw0gsgc/видео.html
You have an excellent way of teaching.go on buddy.
Cheers for the support!
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Thanks :)
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Thanks Alice, great to hear it's making sense!
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I am now taking an Accountancy course, thankyou so much for these videos!
No problem, all the best with your studies!
Could you do a video on Reversing Entries? Thank you so much for your simple way of explaining and clarifying what are more difficult topics. You are a LEGEND!
Thanks for your suggestion!
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Haha, no worries Yuna!
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Great, hope it starts making sense for you!
Thank you very much for all this love and respect you put into your content! A question - how do the accountants remember to subtract 1/4, 1/12, or whatever? How do they keep all the necessary adjustments in mind?
It helps to keep the accrual method of accounting in mind. Revenue should be recognised as it's earned and Expenses should be recorded as they are incurred.
God bless you, Sir! ❤️
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Good stuff!
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Thanks Erin!
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Thanks Amy, glad you found it useful. I'll keep your suggestion in mind for future vids
I was never an accounting student but studying accounting and bookkeeping without going to college again I began to understand what accounting is and why is it important. I want to be a Bookkeeper someday. Thanks.
Self learning is the way to go! Good on you
You are good.. Thank you
Dude THANK YOU!
You're most welcome :)
Your your videos are really helpful. I would be really thankful if you can post video on unearned revenues
Here you go: ruclips.net/video/F1zNQ1wga7o/видео.htmlsi=bjMM1UkwWA9r5eOd
Your videos are super helpful with a confusing topic. Could you do a video on depreciation and contra accounts?
Cheers Lucas, yes I have plans to cover Depreciation in the near future
thanks for the teaching
No problem Lian!
Awesome explanation
Thanks mate :)
In the Vietnamese Accounting system, we recognize directly Prepaid Expenses and then allocate Prepaid Expenses to Insurance Expenses for each accounting period.
You're the best.
Thanks!
I can't just leave this vid without saying my thanks!
Cheers Alfredo, hope it makes sense!
While waiting for another midterm exam. Grabbing to watch things I missed yesterday but still it's a 51/65..ty for all of this video.
Best of luck!
I've learned more in these videos in 1 day than I have in the last 3.5 months of class.
Glad you're finding them helpful! All the best with your studies :)
@@AccountingStuff Just wanted to thank you again for these videos! I got 89% on my bookkeeping I final exam! I wasn't ever able to pull more than a 60% all semester!
@@PlainJanePlants Congrats!! You nailed it :)
Thanks...sir. I've come here to review this lecture.
No worries, hope it helps!
Can you do a video about what you do with consumables at end of year.
Cheers for your suggestion!
Can I maybe ask a question about it
I also have a question about it . Why does consumables boight during the year get placed in the expense column if youre not sure its all gonna be an expense for the year
Hi James, I am loving your videos. They are so practical and entertaining - thank you for abandoning physics. I have a question that I would be very grateful if you had the time and inclination to answer, and that is, how would you do a manual journal entry for prepaid car insurance when the sales tax (GST in Australia) is only applied to part of the insurance? Would you split the Insurance Expense into 2 line items for the GST and GST-free portions? Thanks!
Hey Prema, thanks it's great to hear that you're enjoying the videos! Sure thing... I think that you could post that journal entry either way. Although my preference would be to break out into GST and GST-free line items with descriptions alongside each. The more detail the better
Thank youuuu!!
Thank you so much . completely understand by Ur video
Cheers Savin, great to hear it's making sense
Ur from?
@@savinpoojary2756 England :)
It Great help from Ur side. And thank you so much
Hello James, I would like to know if software from website hosting companies and zoom can be considered a prepaid expense. Have a good one and keep up the goo work!
Thanks this is helpful
No worries, that's great to hear!