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For e.g the balance of the rent account is $1000.So this will appear on the debit side on the trial balance.But why is it that it is not a prepaid while preparing financial statements instead the prepayment of for e.g $200 appears in the notes??
Rent is an expense and it appears on the SOPL.
If any of the payment is prepaid, then the prepayment appears on the SOFP as a current asset and only the remainder of the cash paid is the expense of the year which appears in the SOPL.
You need to watch my free lectures on accruals and prepayments. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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