Question

Prepaid expenses are shown on the ________ side of the Balance Sheet. (Fill in the blank by choosing correct option)
a) assets
b) liability
c) debit
d) credit

Answer 1

Heya user ✨✨

⏩ Prepaid expense are shown on the Asset side of the balance sheet .

Answer 2

Prepaid expenses are shown on the asset side of the balance sheet.

Option (a).

Explanation:

• Prepaid expense can be defined as an expenditure which has been paid for in a particular accounting period. This prepaid expense is shown on the current asset side of the balance sheet till the time it is consumed.
• Insurance is one of the most well-known examples of prepaid expense.
• It is frequently been paid and settled in advance for a multiple number of future periods.
• The reason for marking an expense as a prepaid expense is to clarify and record the periods in which they are actually consumed.