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In this video tutorial, the correct way to record pre-payments to vendors and advances for prepaid expenses in QuickBooks is shown. The incorrect method is demonstrated first, which involves writing a check to the vendor and attributing the amount to accounts payable. Two correct methods are then explained to rectify this process. A test company is set up as an example, with a prepaid expense account, a bank account with sufficient funds, and accounts payable for the vendor, John Doe. The incorrect scenario involves giving a 50% advance of $500 to the trucker before his $1,000 trip. The correct ways to record this transaction are detailed in the tutorial.
