When a company records the purchase of 1 month of prepaid expense the transaction does not affect the totals of assets or liabilities and stockholders' equity.

Name: When a company records the purchase of 1 month of prepaid expense the transaction does not affect the totals of assets or liabilities and stockholders' equity.
Brand: Quizplus
Rating: 4.9 (38 reviews)

Question

Quizplus · Accepted Answer

Prepaid expenses are recorded as assets, and the purchase of prepaid expenses increases the asset account. The transaction does not affect liabilities or stockholders' equity.

When a Company Records the Purchase of 1 Month of Prepaid