What exactly is a prepaid expense? First of all, is it an asset or a liability? In addition,is it included in the current assets or liabilities or in the non current assets or liabilities?
Prepaid expenses are things that you have paid in advance so the company that you paid owes you something (a service to be delivered in the future). For you, it’s an asset. For the other company it’s deferred income which is a lliability.
