Prepaid expenses are:
A)Payments made for products and services that do not ever expire.
B)Classified as liabilities on the balance sheet.
C)Decreases in retained earnings.
D)Assets that represent prepayments of future expenses.
E)Promises of payments by customers.

Question

Quizplus · Accepted Answer

Prepaid expenses are considered assets because they represent prepayments of future expenses. They are recorded on the balance sheet until they are used or expired, at which point they are expensed.

Prepaid Expenses Are