Prepaid expenses such as for insurance are classified as deferred outflows, rather than as assets.

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Prepaid expenses, including prepaid insurance, are classified as current assets on the balance sheet because they represent future economic benefits that the company has already paid for. Deferred outflows are a separate category used under governmental accounting standards and do not typically apply to prepaid expenses in traditional business accounting.

Prepaid Expenses Such as for Insurance Are Classified as Deferred