Prepaid expenses a. do not require an adjusting entry. b. are similar to accrued expenses because both have been recorded. c. are an advance payment of cash. d. are an advance receipt of cash.

Prepaid expenses c. are an advance payment of cash.

Explanation:

Prepaid expenses are the expenses that are paid in advance for the purchase to be made. The prepaid expense is an expenditure paid for in one accounting period. The prepaid expenses are mentioned in the balance sheet as an asset in the company.

The premium paid for two years against the insurance policy is considered as the prepaid expense.

Once the cash is paid, the amount is debited from the asset account and credited in the cash account. The adjusting payment is made for the product from the asset account and right away debiting the prepaid expenses account once the product or service is delivered.