Prepaid Expenses

Office Management

• PREPAID AND ACCRUED EXPENSE SCHEDULE

Prepaid expenses, such as prepaid insurance, taxes and licenses, represent payments made in advance which are applicable to accounting periods beyond the current month. A schedule should be maintained for each prepaid expense account to support the general ledger balance and to insure that the prepayment is written off equitably over the period covered by the payment. A suggested form for maintaining a prepayment schedule is illustrated below.

The dealer should review his insurance in force at least once each year to ascertain that adequate coverage is maintained and that there is no duplication of coverage.

Insurance policies should be stored in a safe or vault for safekeeping.