Prepaid expenses are paid and recorded in an asset account b

Prepaid expenses are paid and recorded in an asset account before they are used or consumed paid and recorded in an asset account after they are used or consumed. incurred but not yet paid or recorded. incurred and already paid or recorded

Solution

Prepaid expenses are:

Paid and recorded in assets accounts before they are used or consumed.

Prepaid expenes are part of current assets. As name suggests, Pre denotes to before and Post denotes to after.

Prepaids are paid in advance for the upcoming expenses. For example, At the beginning of the year rent for 12 months are paid in advance.This will be termed as prepaid rent expenses as it has been paid before rent periods expire.

As it is related with expenses, these are expenses which has not been incurred or expired but payment for that expenses have been paid in advance.