Prepaid Expenses Are Eventually Expected to

question 14

Multiple Choice

Prepaid expenses are eventually expected to

• A) become expenses when their future economic value expires.
• B) become revenues when services are performed.
• C) become expenses in the period when they are paid.
• D) become revenues when the liability is no longer owed.

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Definitions:

Hedge

An investment made to reduce the risk of adverse price movements in an asset.

Balance Sheet Exposures

The risks shown on a balance sheet due to fluctuations in foreign exchange rates, interest rates, and other variables affecting asset and liability values.

Foreign Operations

Business activities conducted in a country different from the company's home country, often requiring management of currency exchange, legal, and cultural differences.

Days' Sales

A financial metric indicating how quickly a company's inventory is sold and replaced over a specific period.