Could rent qualify as a prepaid expense?

Yes, rent can be considered a prepaid expense. In Accounting terms, a prepaid expense is any cost a business incurs before it actually uses or consumes the associated goods or services. When rent is paid in advance, it is initially recorded as an asset on the balance sheet under prepaid expenses. This is because the payment is made for a future benefit – the right to occupy or use a property for a specified period. As time progresses and the entity utilizes the rented space, the prepaid amount is gradually expensed on the income statement to match the cost with the periods in which the benefit is realized. This is consistent with accrual Accounting, which seeks to match expenses with revenues during the relevant periods.