Prepaid Accounts (Also Called Prepaid Expenses) Are Generally

question 193

Multiple Choice

Prepaid accounts (also called prepaid expenses) are generally:

• A) Decreases in equity.
• B) Payments made for products and services that never expire.
• C) Promises of payments by customers.
• D) Classified as liabilities on the balance sheet.
• E) Assets that represent prepayments of future expenses.

---

Definitions:

Used Equipment

Previously owned machinery or tools that are available for sale and use, often at a lower cost compared to new equipment.

Net Profit Margin Percentage

A financial ratio that indicates how much of each dollar of revenues is translated into profits, calculated by dividing net profit by revenue and multiplying by 100.

Net Income

The total earnings of a company after subtracting all expenses from its total revenues, indicative of its profitability.

Sales

The overall income produced through the sale of a company's products or services.