Deferred Expenses VS Prepaid Expenses

The main difference between Deferred Expenses and Prepaid Expenses is that Deferred Expenses can be Current Assets And Non Current Assets whereas Prepaid Expenses can be only treated as Current Assets. Deferred Expenses can be used for both short term and long term. Short term is for One year or less than one year while Long-Term is for more that One year while Prepaid Expenses only be used for short-term and recorded under current assets section on the assets side or the right side of the balance sheet.

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Examples of Deferred Expenses are Advertisements, Development Expenditures that carried out more than one years.

Examples of Prepaid Expenses include Salaries, Electricity Bills, Rent, etc., carried out for the one year or less than one year.