10) When are prepaid expenses (an asset) recorded? When cash is paid for services not yet received. When are the expenses recognized on the income statement? Expenses are recognized on the income statement when services are performed. What is the impact on the Horizontal Equation for recording a Prepaid Expense? AssetsLiabilities Stockholders' Equity Revenues Expenses Cash Income Flow What is the impact on the Horizontal Equation once the prepaid services are performed? Net Cash Assetsbies Stockholders Equity Revenues Expenses Income Flow