When cash is paid before the related expense is incurred,an asset is reported on the balance sheet.

Question

Quizplus · Accepted Answer

When cash is paid before the related expense is incurred, it results in a prepaid expense, which is reported on the balance sheet as an asset. This is because the organization has paid for a service or expense that will be utilized or incurred in the future, hence it represents an economic benefit that the organization is entitled to.

When Cash Is Paid Before the Related Expense Is Incurred,an