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.
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.
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.
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.