Читать книгу Corporate Finance For Dummies - Michael Taillard - Страница 83

When a company pays for some expense in advance, the value of that prepayment becomes an asset (called a prepaid account) for which the company will receive services in the future. Consider insurance as an example. If a company prepays its insurance for a full year, the full dollar amount paid will add to the value of the company’s prepaid accounts. Every month, the company decreases of the value of that prepaid account (each month the company uses up one month’s worth of value). In other words, the company uses up its prepaid accounts as the service it paid for is provided.