When cash is paid before the expense is incurred to generate revenue,costs are stated as:
A)Prepaid (asset).
B)Payable (liability).
C)Receivable (asset).
D)Shareholders' equity.

Question

Quizplus · Accepted Answer

When cash is paid before the expense is incurred, it is considered a prepaid expense, which is classified as an asset on the balance sheet. This asset is then gradually expensed over time as the related revenue is generated. Therefore, choice A (Prepaid) is the correct answer.

When Cash Is Paid Before the Expense Is Incurred to Generate