Examples of prepaid expenses include insurance, rent, leases, interest, and taxes. Prepaid expenses aren’t included in the income statement per generally accepted accounting principles (GAAP).

David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning.

On a company’s income statement, also called its profit ... be a poor representation of profitability. One example: Generally accepted accounting principles, or GAAP, require that unrealized ...