What are the differences between accrual accounting and prepaid expenses as discussed in your college journal entries?

Question

Accepted Answer

Accrual accounting recognizes revenue and expenses when they are incurred, while prepaid expenses are expenses paid in advance.

Accrual accounting records revenue and expenses when they are earned or incurred, regardless of when cash is exchanged.
Prepaid expenses are expenses that have been paid in advance but have not yet been incurred.
Accrual accounting provides a more accurate representation of a company's financial position and performance over time.
Prepaid expenses are typically recorded as assets on the balance sheet until they are used or expire.
Examples of prepaid expenses include prepaid rent, insurance premiums, and supplies.
Examples of accrual accounting include recognizing revenue when services are provided, even if payment has not been received yet.

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