Prepaid expenses have A been recorded as expenses and paid B

Prepaid expenses have

A. been recorded as expenses and paid

B. been incurred and paid

C. not yet been recorded as expenses

D. not yet been recorded as expenses but have been paid

Solution

Prepaid expenses are future expenses which are paid in advance. Example we paid the insurance premium for the year 2018 in the month of january. So this expenses is for the whole of the year 2018 not for the only month of january. So there is apportioned the insurance expenses between 12 month and recorded the expenses of one month and 11 months are the prepaid expenses/.

So as per the above, correct option is not yet been recorded as expenses but have been paid

Answer = Option D = not yet been recorded as expenses but have been paid