Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 2 - No. 20)
What does the term "prepaid expense" refer to?
An expense paid in the current accounting year that will be recognized in the next year.
An expense that has already been paid but has not yet been used or incurred.
An expense that has been incurred but not yet paid.
An expense that is paid in advance and recognized in the current period.
Explanation
A prepaid expense is an expense that has been paid but the benefits will be received in a future period.
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