Are you a diligent worker or a moonshiner with empty pockets? Come and take a look at your finances!
The debit balance of the prepaid account refers to the amount paid by the enterprise to the supplier in advance, that is, the payment paid by the enterprise to the supplier in advance. This balance is debit in nature and represents the amount that has been paid in advance by the business. On the balance sheet, the prepayment account should be shown as a debit balance. Advance payment is the amount paid in advance by the enterprise to the supplier for the purchase of goods or the acceptance of services, which is usually used as a kind of working capital of the enterprise to supplement the insufficient working capital of the enterprise. When an enterprise purchases goods or receives services, it needs to pay a certain amount of money to the supplier in advance, which is often referred to as "advance payment". If there is a credit balance on the prepayment account, it means that the business has received a prepayment that has been refunded by the merchant, which is an exception.
After reading this, do you know more about your finances? If you have any other questions about finance, please leave a message in the comment area, and we'll see you in the next issue!