Prepaid expenses have a. not yet been paid but recorded as expenses b. not yet been recorded as expenses but have been paid c. not yet been paid nor recorded as expenses d. been recorded as expenses and paid

Question

Business

Jayce Duran

16 June, 08:39

Prepaid expenses have a. not yet been paid but recorded as expenses b. not yet been recorded as expenses but have been paid c. not yet been paid nor recorded as expenses d. been recorded as expenses and paid

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Answers (2)

Know the Answer?

Wally · Answer 1

The correct answer is letter "B": not yet been recorded as expenses but have been paid.

Explanation:

A Prepaid Expense is a Balance sheet asset. According to Accounting Principles, expenses are often accrued on the Balance Sheet and expensed in a later period, even if they have already been partially or fully paid. The expense is often accrued to balance the revenue earned for which it was incurred. This is provided for expenses related to the production of goods that will be sold at a later date.

Miss Piggy · Answer 2

The answer is B.

Explanation:

Prepaid expense is an expense that has been paid for but the benefits or satisfactions have not been fully derived. They are yet to be recorded as an expense.

Prepaid expense is an asset to a business or firm. For example, a business has paid for an insurance that will last for a year or has paid for a rent that will last a year.

As the benefit is being enjoyed, the business will recognize it as an expense and prepaid expense account in the balance sheet will decrease by the same amount.

The correct answer is B. prepaid expense has not yet been recorded as expenses but have been paid for.