Prepaid Expenses
Prepaid expenses are an asset on the balance sheet. They represent expenses that have been paid for but not yet accrued.
Imagine you pay $120 for 12 months of rent in January. You would expense the $10 for the month of January, but since you paid up front, your prepaid expenses balance would be $110.
In the room
Prepaid expenses are the mirror image of accrued expenses, and interviewers sometimes ask you to compare them. You paid cash before consuming the service, so it sits as an asset until it gets expensed over time.