What is prepaid rent?

Prepaid rent is an advance payment for rental rental. The amount of preparation is made on books of business leasing as a current account of assets that will be in the future in the future. Since the company carries out its accounting, the account of prepaid rental costs allows the accounting to monitor the value of the asset until the amount on the account is spent. Business will regularly generate a set of financial statements to summarize its financial situation. These statements correspond to a set of generally accepted accounting directors that standardize financial reporting, so businesses can be compared to a common background. Standard accounting conventions determine how to carry out unpaid deposits of rent for rent books until the deposit is actually used as a monthly rent.

The lease of property lease is considered to be a tangible asset. When the company concludes such an agreement, it often has to pay not only rent but also a certain number of months in advance JAKO security for performance by agreement. This security deposit may be returned at the end of the lease on the basis of satisfaction with certain conditions or considered as non -refundable preparations that apply for months at the end of the tail of the agreement. Whether the security deposit is returning or irreversible determines how the amount is processed for accounting purposes.

Increable rental payments that cover rent for future months are made on the books of the property owner as delayed undeserved income. The amount is made on business books that rent a property on a prepaid rent. This account is capitalized or reduced the amount of prepaid rent in fact will actually apply to the payment of the monthly rent.

This accounting Convention is particularly important in generating the balance sheet. The balance sheet is a summary of the financial situation of the company at some point. Rent deposits may apply to months that have been in the future in the future. Until the amount is actually used for payment for monthlyThe use of rented assets must be properly represented as a current asset when the Company generates its financial statements. The lease prepaid account allows the company to show that it has a current asset that will benefit the company at the future date.