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)Stockholders's equity.

Question

Quizplus · Accepted Answer

When cash is paid before the expense is incurred to generate revenue, it is considered as a prepaid expense and is recorded as an asset on the balance sheet. This is because the payment was made in advance and the benefit of the expense will be received in the future.

When Cash Is Paid Before the Expense Is Incurred to Generate