A company purchases a 1 year contract for $360 on April 1st with a payment due at the end of June 30th. How would this affect the 3 statements on April 1st, May 1st; also June 30th with the payment?A company purchases a 1 year contract for $360 on April 1st with a payment due immediately. Effect on the 3 statements on April 1st and May 1st?

#2 is easy - it's prepaid expense since you're paying upfront before incurring the expense. April 1st: Cash payment goes out but you haven't incurred anything yet. Income Statement doesn't change. On CFS, you have a cash outflow of -$360 in cash flow from operating activities. On BS, cash (assets) goes down -$360, prepaid expenses (assets) goes up +$360. May 1st: Now 1 month has elapsed, so you've incurred $360 / 12 = $30 of expense. On the income statement, you recognize the $30 of expense.

Is this prepaid assets or accrued expenses?

A company purchases a 1 year contract for $360 on April 1st with a payment due at the end of June 30th. How would this affect the 3 statements on April 1st, May 1st; also June 30th with the payment?
A company purchases a 1 year contract for $360 on April 1st with a payment due immediately. Effect on the 3 statements on April 1st and May 1st?

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