Accounts & Finance

A prepaid expense is a form of asset on the balance sheet that arises from a company making advance payments for goods or services that will be delivered later. Unlike traditional expenses, the prepaid expense will provide benefit to the company over the course of numerous accounting periods. Unearned income is money received for a service or product that has yet to be provided or delivered by an individual or corporation. Because it indicates a debt owing to the consumer, it is reported as a liability on a company's balance sheet. Accrued income is money that has been obtained through the provision of a good or service but has not yet been paid in cash. Customers owe the business money for the items or services they purchased, thus accrued revenues are reported as receivables on the balance sheet.