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Dear John,
Prepayment is considered as current asset. If we have got prepaid income from rent then how it will reduce profit in statement of profit and loss and will be considered as current liability in SFP.Kind regards,
IrumA prepaid expense is a current asset.
However prepaid income is where you are receiving income (for example receiving rent) and the person paying has prepaid – i.e. they have paid us some of the income relating to next year. Therefore at the end of this year they have overpaid us and therefore we owe them money – a current liability.
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