All of the Following Are True Regarding Prepaid Expenses Except

question 110

Multiple Choice

All of the following are true regarding prepaid expenses except:

• A)They are paid for in advance of receiving their benefits.
• B)They are assets.
• C)When they are used,their costs become expenses.
• D)The adjusting entry for prepaid expenses increases expenses and decreases liabilities.
• E)The adjusting entry for prepaid expenses increases expenses and decreases assets.

---

Definitions:

Producer Gains

The profits or positive financial outcomes that producers experience from selling goods or services, often due to pricing or market conditions.

Deadweight Loss

Refers to the loss of economic efficiency when the equilibrium for a good or service is not achieved, leading to a net welfare loss.

Price Floor

A governmental or regulatory minimum price set above the equilibrium price, preventing the market price from falling below a certain level.

Pounds

A unit of weight commonly used in the British imperial and United States customary systems, equal to 0.45359237 kilograms.