Do Prepaid Expenses affect Retained Earnings?
Prepaid expenses decrease cash and increase prepaid expenses on the balance sheet. What about operational cash on CF and then RE?
Trending Content - Investment Banking Forum
| +350 | Evercore Intern Seizure | 54 | 1h |
| +66 | JPM M&A is Gone??? Purely Coverage Banking??? | 31 | 1h |
| +58 | Is DCM actually underrated ? | 24 | 12h |
| +48 | Losing my personality in Banking | 9 | 12h |
| +48 | How do I understand vs. just memorizing? | 5 | 10h |
| +47 | Are all Tech / TMT groups sweaty? | 38 | 13h |
| +42 | Associate & Above IB exits | 16 | 3d |
| +32 | Incoming IB Analyst: Best Ways to Prepare? | 10 | 9h |
| +27 | Which groups are ideal for laterals? | 12 | 11h |
| +24 | The good and bad with Wells Fargo | 1 | 17h |
Career Resources
Hi Dinya,
Cash flows from operations are decreased when prepaid expenses are set up, and then there are increasing adjustments to net income in arriving at cash flows from operations as the prepaid expense amount is amortized, as it is a non-cash expense.
Prepaid expenses impact retained earnings as they are amortized into net income. There is no impact upon the original set up.
Hope that helps.
Similique maxime dolorem iste temporibus omnis beatae quas delectus. Ut quo repellendus aut mollitia sapiente. Eos distinctio vitae id quo quis omnis non.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...