Prepaid accounts (also called prepaid expenses)are generally:
A)Payments made for products and services that never expire.
B)Classified as liabilities on the balance sheet.
C)Decreases in equity.
D)Assets from prepayments of future expenses.
E)Promises of payments by customers.

Question

Quizplus · Accepted Answer

Prepaid accounts are assets from prepayments of future expenses. This means that a payment has been made to cover a future expense, and the amount paid is recorded as an asset on the balance sheet until the expense is actually incurred. Examples of prepaid expenses include prepaid rent, prepaid insurance, and prepaid advertising.

Prepaid Accounts (Also Called Prepaid Expenses)are Generally