Fill in the Blank Question Prepaid accounts are (assets/liabilities) that represent prepayments of future expenses and...

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business accounting

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Answer 1

Answer #1

Prepaid accounts are ASSETS that represent prepayments of future expenses and are increased with a DEBIT

Like for example, if a company pays insurance in advance for a year for $1200.

Then journal entry would be

Prepaid Insurance Debit $1,200

Cash Credit $1,200

Since cash is an outflow, it will be credited and Prepaid account is debited as an asset!

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Answer 2

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