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Question
State the meaning of Prepaid expenses
Solution
Prepaid Expenses: These refer to those expenses for which the benefits have not been realised but the payments have already been made in advance.
These are basically the advance payments for the next year, which are made in the current accounting period.
Example: Prepaid insurance premium of ₹ 1,000 means that the payment of ₹ 1,000 is made in advance for the next accounting period.
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RELATED QUESTIONS
Pre-paid expenses are shown on the ....................... side of balance sheet.
- Assets
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Give the word / term or phrase which can substitute the following statement.
Expenses which are paid before due.
Select the most appropriate alternative from those given below and rewrite the statement.
Prepaid expenses are shown on the __________________ side of the balance sheet.
State whether the following statement is True or False.
Prepaid expenses are shown on the asset side of the Balance Sheet.
Show the treatment of prepaid expenses depreciation, closing stock at the time of preparation of final accounts when:
(a) When given inside the trial balance?
(b) When given outside the trial balance?
