true or false? When a company pays its rent in advance, an asset is reported on...
Homework Answers
Ans) True
Explanation
To be an asset an element needs to meet all the below 3 characterstics.
1) Arose from a past transaction (related to past)
2) Company should currently own it (related to present)
3) Must have future economic benefits. ( related to future).
Conclusion - when rent is paid in advance it is called as prepaid expense.Based on the above mentioned characterstics we can say that prepaid expense is an asset, as it fulfills all the three criteria of past, present and future.
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