Prepaid expenses are Group of answer choices A. incurred but not yet paid or recorded. B. paid and recorded in an asset account before they are used or consumed. C. incurred and already paid or recorded. D. paid and recorded in an asset account after they are used or consumed.

Question

Business

Eric Glenn

2 September, 15:27

Prepaid expenses are Group of answer choices A. incurred but not yet paid or recorded. B. paid and recorded in an asset account before they are used or consumed. C. incurred and already paid or recorded. D. paid and recorded in an asset account after they are used or consumed.

+2

Answers (2)

Know the Answer?

Leanna Clayton · Answer 1

B! Sorry I don't have time to write the explanation, but I know it is B!

Luis Beasley · Answer 2

B is the correct option

Explanation:

Prepaid expenses are expenses paid for in advance. They are regarded as current assets, since the entity making such payment still has a claim on it.

When expenses are prepaid, the cash account is credited and prepayment account (current asset) is debited.

When the expense is finally incurred, a debit is recorded in related expense account and a credit in prepayment account, since expenses are recognized when incurred not when payment is made.