How to Manage Deferred Expense in Odoo 14 Accounting?

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.

These future expenses must be deferred on the company’s balance sheet until the moment in time they can be recognized, at once or over a defined period, on the Profit and Loss statement.

Odoo Accounting handles deferred expenses and prepayments by spreading them in multiple entries that are automatically created in draft mode and then posted periodically until the full amount of the expense is recognized.

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