What statement and type of account does Prepaid Expense belong to?
Understand the Problem
The question is asking which type of statement and account category applies to Prepaid Expense, specifically looking for classifications in financial accounting.
Answer
Statement of financial position and asset.
The final answer is Statement of financial position and asset.
Answer for screen readers
The final answer is Statement of financial position and asset.
More Information
Prepaid expenses are considered assets because they represent future economic benefits. They are recorded on the balance sheet under current assets.
Tips
A common mistake is thinking prepaid expenses are classified under liabilities or immediate expenses. They are initially assets.
Sources
- Prepaid Expense: Definition and Example - Investopedia - investopedia.com
- What are Prepaid Expenses? | F&A Glossary - BlackLine - blackline.com
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