Prepaid Salary In Profit And Loss Account

The portion of Prepaid Salary which is expired in the current accounting period is recorded in Profit And Loss Account or Income Statement as an Expense. and the remaining unexpired part of prepaid salary is treated as a current asset on the balance sheet.

If the prepaid salary is fully expired then it is closed by passing Reversing Entry and expired costs is recorded in profit and loss account as an expense for the accounting period in which it is fully expired.