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Capital and revenue expenditure
Accountancy
Please explain Difference between deferred revenue expenditure and prepaid expenses
Answers (12)
Reetikaa R
I think ,prepaid is for nxt year alone but deferred exp gives benefit for a couple of yrs but both are already paid
Means rent prepaid for 1 year it's prepaid expenses And rent prepaid for 5 years so it is deferred revenue expenditure
Thread Starter
Sejal Shivani?
Layman's example ..... Suppose you are running a toothpaste co.. For that toothpaste you are spend money on advertising on the toothpaste.... The expenses of money which are incurred in the financial year (I.e) the current year ... But The benefits will be upcoming year that is future it may be 1 or 2 year .... Have you got it
Thread Starter
Sejal ShivaniMeans rent prepaid for 1 year it's prepaid expenses And rent prepaid for 5 years so it is deferred revenue expenditure
Rent prepaid for 5 years is not deferred revenue expenditure
Deferred expenses, often known as deferred costs, fall in the long-term asset class. Prepaid expenses is a current asset related to a non-capital expenditure. A normal business revenue expense is paid in advance due to a contract or business obligation but the benefit is going to be enjoyed within the next year, it is called prepaid. Deferred revenue expenditure is an expenditure where result and benefits of this expenditure are obtained over the multiple years in the future.
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