Deferred expenses (prepaid expenses) are advance payments of future expenses. Deferred expenses are the ones that are firstly paid and reported as an asset but will not be recorded as an expense until a future accounting period. In other words, cash is paid before the expense is recognized. Rent, interest, insurance, etc. are the examples of prepaid expenses. The amounts of office supplies used up may also be considered as prepaid expenses. As it is not necessary, such kinds of expenses are not required in daily recordings. For that reason, companies do not recognize them until the preparation of their financial reports.