Other Current Assets

Accounting for Funds held in Escrow

Accounting for Funds held in Escrow

A business pays cash into an escrow account held by a third party in respect of a property transaction. The amount remains the property of the business until the transaction is complete and shows as a current asset in the balance sheet of the business.

Last modified July 16th, 2019 by Michael Brown
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rent deposit accounting equation

Rent Deposit Accounting Journal Entry

A rental deposit is paid by a business to a landlord when renting premises. The deposit is refundable but is held by the landlord as security in the event that the business has caused damage to the property or has rent outstanding when the property is vacated.

Last modified November 12th, 2019 by Michael Brown
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consumable supplies on hand accounting equation

Consumable Supplies Expense

Following a physical count, a business has consumable supplies on hand of 350. The accounting records before adjustment show supplies on hand of 500, and an adjusting entry is needed to record the amount of supplies used for the period.

Last modified March 14th, 2023 by Michael Brown
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prepaid rent accounting equation

Prepaid Rent Accounting Entry

Prepaid rent is an expense which has been paid in advance.

A business has an annual office rent of 12,000 and pays the landlord 3 months in advance on the first day of each quarter. On the 1 April it pays the next quarters rent in advance of 3,000 to cover the months of April, May and June It has a prepaid expense of 3,000.

Last modified December 6th, 2019 by Michael Brown
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prepaid expenses insurance cost

Prepaid Expenses

Prepaid expenses are costs paid by a business which have not been fully utilized during one accounting period; they overlap accounting periods. Prepaid accounting arises from the matching concept, one of the fundamental accounting principles.

prepaid accounting

Last modified March 17th, 2023 by Michael Brown
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prepaid expense accounting equation

Prepaid Expense Journal Entry

A prepaid expense is an expense which has been paid in advance.

A business has an annual premises rent of 60,000 and pays the landlord quarterly in advance on the first day of each quarter. On the 1 January it pays the next quarter rent of 15,000 to cover the 3 months of January, February, and March. It has a prepaid expense of 15,000.

Last modified March 14th, 2023 by Michael Brown
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