What is the definition of a quick asset?Ī quick asset, also known as a liquid or current asset, is an item that can easily be converted into cash within a short period of time. This knowledge allows companies to make more informed procurement decisions based on their current cash flow and projected revenue streams. Prepaid expenses help businesses plan their budgets better since they know what their future obligations will be ahead of time. It also helps ensure there are no lapses in service when contracts come up for renewal. Prepaying these costs can provide some advantages such as lower prices due to bulk purchasing or discounts given by vendors for early payment. These kinds of expenses can be significant and critical to running a successful business. Essentially, they represent an asset because the company has already paid for them but hasn’t yet received anything in return.Įxamples of prepaid expenses include rent payments made at the beginning of a lease term, insurance premiums paid upfront, and subscriptions to magazines or other publications. Prepaid expenses are costs that a business pays in advance for goods or services it will receive later. So let’s dive right into it! What are prepaid expenses? Plus, we’ll give you some tips on how to effectively account for them in your procurement operations. Fear not! In this blog post, we will explore what prepaid expenses are, define quick assets and answer whether they fit into that category. You may have heard about prepaid expenses before but wondered if they belong to the former or latter category. Are Prepaid Expenses Quick Assets In Business?Īre prepaid expenses considered quick assets in business? As a savvy entrepreneur, it’s essential to understand the difference between a quick asset and a non-quick one.
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