Which of the following statements accurately explains Prepaid Expenses and

Unearned Revenue in terms of assets and liabilities?

Both Prepaid Expenses and Unearned Revenue are classified as assets on the

balance sheet because they represent future economic benefits to the company.

Prepaid Expenses are assets because they represent costs paid in advance for

benefits the company will receive in the futuretwhile Unearned Revenue is a

liability representing money received for services or goods yet to be delivered.

Both Prepaid Expenses and Unearned Revenue are considered liabilities as they

signify future obligations that the company must meet.

Prepaid Expenses are considered liabilities because they represent services or

goods a company is obligated to provide in the future, whereas Unearned

Revenue is an asset reflecting advance payments for services or goods.