Prepaid Expenses Are

question 110

Multiple Choice

Prepaid expenses are

• A) paid and recorded in an asset account before they are used or consumed.
• B) paid and recorded in an asset account after they are used or consumed.
• C) incurred but not yet paid or recorded.
• D) incurred and already paid or recorded.

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Definitions:

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth.

Compounded Annually

A method of calculating interest in which the interest is added to the principal at the end of each year, then new interest is calculated on the total for the next period.

Present Value

The now-value of a prospective sum of money or cash flow sequence, according to a certain rate of return.

Rate of Return

The financial outcome, either positive or negative, of an investment within a set period, delineated as a proportion of the investment’s initial outlay.