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Accrued expense
- Expense incurred but not paid in cash
- Affects OH and current liability
- In the next period the accruals will cease to be a liability once it is paid
Prepaid expense/prepayment/deferred
- The amount received in advance, but the economic benefits have not been used or consumed
- Will affect cash and another current asset (prepayments)
- In the next period the prepayment will cease to be an asset and become an expense in the income statement
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