Utility expense is considered as prepaid expense as the amount of this is paid before using the service.
An expense that has already been paid but has not yet been incurred is considered to as a prepaid expense. Whenever a business makes payouts for goods or services that will be delivered in the future, the outcome is a prepaid expense, which is recorded as an asset on a company's balance sheet.
While initially recorded as assets, prepaid expenses ultimately have their value expensed onto the financial statements. The prepaid expense is distinct from other expenditures in that the company will benefit from it over course of multiple financial years. There various examples of prepaid expenses are- utility expenses, taxes, salaries etc.
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