Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 38 - No. 36)
In the context of adjusting entries, what does the term 'prepaid expense' represent?
An expense paid in advance that has not been used.
An expense that is paid after it has been used.
Revenue that has been earned but not yet collected.
An asset that has been converted to an expense.
Explanation
A prepaid expense is an asset that is recorded when a payment is made in advance of an expense.
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