Question

Which of the following statements is correct about prepaid accounts O Prepaid accounts are also called prepaid expenses and are considered assets. O Prepaid accounts are another name for accounts receivable and are reported as an asset. O Prepaid accounts are current expense accounts and are reported on the income statement. O Prepaid accounts are also called prepaid liabilities and are classified as liabilities.

Answer 1

Answer

Prepaid accounts are also called prepaid expenses and are considered assets TRUE

EXPLANATION

Prepaid expenses are future expenses that have been paid in advance. You can think of prepaid expenses as costs that have been paid but have not yet been used up or have not yet expired. The amount of prepaid expenses that have not yet expired are reported on a company's balance sheet as an asset.

Prepaid accounts are another names for account receivable and are reported as an asset FALSE

EXPLANATION

Prepaid expenses are prepaid accounts and not accounts receivable (accounts receivables are actually the debtors )

EXPLANATION

(for last two sentences)

prepaid expense are shown as current asset account and not current asset account or prepaid liabilities

Thus only statement correct is first one .