Question

Prepaid expenses are:

a. incurred but not yet paid or recorded.
b. incurred and already paid or recorded.
c. paid and recorded in an asset account before they are used or consumed.
d. paid and recorded in an asset account after they are used or consumed.

Answer 1

Answer:

c. paid and recorded in an asset account before they are used or consumed.

Explanation:

The prepaid expenses are the advanced payments that are incurred in advance for receiving the service in future

The prepaid expenses are to be shown on the asset side of the balance sheet. It is a current assets

It is to be paid and recorded before they are actually used or consumed

Hence, the correct option is c.