A deferred expense is a cost that a company has already paid for but has not yet consumed or used up. It is recorded as an asset until the underlying goods or services are consumed, at which point the cost is charged to expense. Deferred expenses are also known as prepaid expenses. Examples of deferred expenses include prepaid rent, prepaid insurance, and prepaid subscriptions.

When a company pays for a cost in advance, it records the amount as a deferred expense on its balance sheet, in an asset account. As the company utilizes the goods or services, it gradually reduces the deferred expense and recognizes the amount as an expense on its income statement.

Deferred expenses are different from deferred revenue, which is money received in advance for products or services that are going to be performed in the future.

In summary, deferred expenses are costs that a company has already paid for but has not yet consumed or used up. They are recorded as assets until the underlying goods or services are consumed, at which point the cost is charged to expense. Examples of deferred expenses include prepaid rent, prepaid insurance, and prepaid subscriptions.