Prepayments occur when:
A) Cash flow precedes expense recognition.
B) Sales are delayed pending credit approval.
C) Customers are unable to pay the full amount due when goods are delivered.
D) Manufactured goods await quality control inspections.

Question

Quizplus · Accepted Answer

Prepayments occur when cash flow precedes expense recognition, such as when a company pays for a service or product before it is received or used. This is often done to secure a discount, take advantage of a promotion, or ensure timely delivery.

Prepayments Occur When