Prepayment: Difference between revisions
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* [[Early Repayment Charge]] | * [[Early Repayment Charge]] | ||
* [[Extension risk]] | * [[Extension risk]] | ||
* [[Prepaid expense]] | |||
* [[Prepayment risk]] | * [[Prepayment risk]] | ||
* [[Prepayments]] | * [[Prepayments]] | ||
Revision as of 10:41, 16 September 2020
1. Banking.
The non-contractual early repayment by bank customers of, for example, fixed rate mortgages.
2. Accounting.
An amount paid in advance for a financial benefit, represented by an asset in the organisation's balance sheet.
It is a prepaid expense.
Example: Venue hire
We book a venue for a function.
And pay 50% of the hire fee in advance.
The 50% paid in advance is an ASSET for us.
We are going to enjoy the use of the venue in future, but it has already been paid for.
So the 50% already paid represents a future economic benefit.
