How to show the Prepaid Expense?

How to show the Prepaid Expense?

Step 1. Book an Invoice for the whole amount under Expense Tracker and pass the relevant Payment Entry.

Step 2. Create a ledger head "Perepaid Expense (E.g. Prepaid AMC-Lift) under General ledger-->>Chart Of Accounts-->>Asset.

Step 3. Pass a journal entry to show the Prepaid Expense for the by Debiting the Prepaid Expense Account and crediting the Same Expense Account against which you have passed the payment Entry.

Step 4. In the current Financial Year pass the reverse Entry by Debiting the Expense Account and crediting the Prepaid Expense Account

Note: This Entry will be passed after the Year End.

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