Match the following terms with the appropriate definition.
-Items paid for in advance of receiving their benefits; recorded as an asset when purchased and expensed when used.
A)Adjusting entry
B)Unadjusted trial balance
C)Prepaid expenses
D)Natural business year
E)Accrued expenses
F)Adjusted trial balance
G)Report form balance sheet
H)Accounting period
I)Profit margin
J)Contra account

Question

Quizplus · Accepted Answer

Prepaid expenses are costs that are paid for in advance of receiving the benefit of the service or product. These are initially recorded as assets because they provide future economic benefits to the business. As the benefits are received or the expense period lapses, the prepaid amounts are then expensed.

Match the Following Terms with the Appropriate Definition