Is an annual fee a prepaid expense?
Jackson Reed
Updated on February 11, 2026
In theory, the payment in advance for a one-year subscription should initially be recorded as a debit to Prepaid Expenses and a credit to Cash. During the subscription period, you would debit Subscription Expense and would credit Prepaid Expenses.
Is a legal retainer a prepaid expense?
Paying a retainer fee to an attorney is an advance payment toward legal services that the company has a reasonable expectation of incurring. When the legal services are rendered, expense the retainer with a credit to prepaid legal and a debit to the legal expenses account.
How do you account for a prepaid expense?
Prepaid expenses are future expenses that are paid in advance. On the balance sheet, prepaid expenses are first recorded as an asset. After the benefits of the assets are realized over time, the amount is then recorded as an expense.
How much does a prepaid expense account cost?
Cash paid to create the Prepaid Expense Account Debit Credit Prepaid expense 15,000 Cash 15,000 Total 15,000 15,000
Is there accounting policy for credit card fees?
Is anyone aware of an accounting policy statement supporting treatment of credit card fees as an offset against revenue (e.g., cost of services sold) as opposed to an operating expense ? Our company treats credit card fees this way but I need to pull together a policy memorandum supporting that treatment. Good morning.
How are credit card fees included in gross profit?
COGS is deducted from Revenues to get Gross Profit. Operating expenses are either Selling or G&A expenses. Selling expenses include freight out, credit card processing fees, advertising, marketing /promo, etc. So, credit card processing fees are an operating expense. Credit card fees are typically accounted for as operating expense.
Can you put expenses on a credit card?
You can put most everyday expenses on a credit card — but not these. Personal finance experts weigh in on which expenses you should reconsider using a card to pay for so you can avoid “credit creep” and stay out of debt.
