Why do people accrue prepaid expenses?

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Because they want to enter it into the AP sub ledger so it gets in the queue for payment

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This

Typically companies will do a month end AJE to true up the P&L for the unamortized portion of the prepaid. Essentially grossing up the balance sheet.

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GAAP…

And for us corporate accountants - normalizing budget year over year and making sense of things when we are going through software upgrades or system conversions.

Some things just have future value. That insurance policy you renew on your house annually has future value the next 12 months.

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