Unexpired Expenses: Definition

Unexpired expenses refer to costs that have already been incurred but have not yet been recorded in the accounting books as expenses. These expenses are considered as prepaid expenses because the cost has been paid for, but the benefit is yet to be received. For example, if a company pays for six months of rent in advance, only one month's rent should be recorded as an expense in that month. The remaining five months' rent is considered as unexpired expenses until the benefit is received.

Accounting Treatment of Unexpired Expenses

Unexpired expenses are recorded as assets as they provide future economic benefits to the company. These expenses are recorded in the balance sheet under the current assets section. The account used to record unexpired expenses is called the Prepaid Expense account.

Classification of Unexpired Expenses

Unexpired expenses are classified as a personal account in accounting because they relate to an individual, usually the company. They are also considered as representative personal accounts because they represent the company's payments for future expenses.

Conclusion

In summary, unexpired expenses are costs that have already been paid for but are yet to be recorded as expenses. These expenses are considered as prepaid expenses and are recorded as assets in the balance sheet. The account used to record unexpired expenses is called the Prepaid Expense account. Unexpired expenses are classified as personal accounts and representative personal accounts in accounting.