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Question
State whether the following statement is True or False.
Prepaid expenses are shown on the asset side of the Balance Sheet.
Options
True
False
Solution
True
Explanation: Those expenses that have been paid in advance for the next year in the current year itself are known as prepaid expenses. The benefit of such payments will be availed in the next accounting year. So, these expenses are a kind of asset for the firm; therefore, they are shown on the Assets side of the Balance Sheet.
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RELATED QUESTIONS
Pre-paid expenses are shown on the ....................... side of balance sheet.
- Assets
- Liability
- Debit
- Cash
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 the meaning of Prepaid expenses
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?
