Which of the following statements is correct?

Question

Quizplus · Accepted Answer

All of the statements are correct. A prepayment is an asset that has been paid for in advance. It is shown as a current asset on the statement of financial position. When there is an increase in a prepayment, the amount of the increase is deducted from the expense on the income statement. A prepayment is shown as a credit on the income statement, reducing the amount of the expense that has already been recorded.

Which of the Following Statements Is Correct