Objective:
To ensure that all the costs and income are amortised in the correct month, taking up necessary expenses to produce accurate financial information for the client.
Prepayments represent expenditures that have not yet been recorded by a company as an expense but have been paid for in advance. In other words, prepaid expenses are expenditures paid for in one accounting period, but that will not be recognized until a later accounting period. Prepayments are initially recorded as assets because they have future economic benefits. As soon as the period of time expires, the appropriate portion of the asset comes off the books and the expense is recognized.
Examples of this type of expense are prepaid rent and prepaid insurance.
- ensures that all additional prepaid expenses are recorded and calculated with the correct period amortization for each expense item. (i.e. 3/6/12 month respectively).
- Schedules are updated and the balances are reconciled with the Xero closing balance every month.
