Deferred expenses and prepayments (also known as a prepaid expense), are both costs
that have already occurred for unconsumed products or services yet to receive. Such
costs are assets for the company that pays them since it already paid for products
and services still to receive or that are yet to be used. The company cannot report
them on the current Profit and Loss statement, or Income Statement, since the payments
will be effectively expensed in the future.