Asked by
Jannette Tellez
on Oct 28, 2024
Verified
A prepaid expense is
A) a payment received by the company in advance for the future sale of inventory or performance of services
B) an item of goods or services purchased by the company for use in its operations but not fully consumed by the end of the accounting period
C) an expense that has been incurred during the accounting period but has been neither paid nor recorded
D) an item that has been earned by the company during the accounting period but has been neither received nor recorded
Prepaid Expense
Expenses paid in advance and recorded as assets before they are used or consumed.
Consumed
Consumed refers to the portion of resources, goods, or services that have been used up in the process of generating revenue.
Accounting Period
A specific period of time covered by financial statements, usually encompassing a fiscal quarter or year.
- Identify and distinguish between different types of accounts such as prepaid expenses, contra accounts, and nominal accounts.
Verified Answer
TS
Learning Objectives
- Identify and distinguish between different types of accounts such as prepaid expenses, contra accounts, and nominal accounts.