The name Prepaid Expense suggests that this account is an expense and belongs on an income statement Instead the account appears on the balance sheet as an asset Explain why this is appropriate and why prepaid expenses may need to be adjusted at the end of each period ...

Prepaid expenses are costs paid before they are used ...

The name Prepaid Expense suggests that this account is an expense and belongs on an income statement.

Question:

The name Prepaid Expense suggests that this account is an expense and belongs on an income statement. Instead the account appears on the as an asset. Explain why this is appropriate and why prepaid expenses may need to be adjusted at the end of each period.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...