Deferred Expenses and Prepaid Expenses

Maybe a deferred expense is an obligation incurred today but is to be paid in the future.

An agreement to pay interest on a loan that is non-cancellable would be an example of an expense that will only crystallise over the years of the loan but next year’s (and all years’ following) interest element will be deferred until the appropriate period.

A prepaid expense is (as the name suggests) an expense paid this year relating to next year (or years beyond)

Ok?

You’re welcome