Expenses paid in advance.Select one:a.Accrued Incomeb.Prepaid Expensesc.Insurance Expensesd.Closing entries
Question
Expenses paid in advance.
Select one:
- a. Accrued Income
- b. Prepaid Expenses
- c. Insurance Expenses
- d. Closing entries
Solution
1. Identify the Key Concepts
The question asks about expenses that are paid in advance. This concept generally falls under accounting terminology regarding prepayments and accruals.
2. Understand the Options
Let's analyze the given options: a. Accrued Income: This refers to income that has been earned but not yet received. It does not relate to expenses paid in advance. b. Prepaid Expenses: This term directly refers to payments made for services or goods to be received in the future. This aligns with the definition of expenses paid in advance. c. Insurance Expenses: While insurance can be paid in advance, this option is too narrow and does not encompass the general term for prepayments. d. Closing Entries: Closing entries are journal entries at the end of an accounting period to transfer temporary account balances. This does not relate to prepaid expenses.
3. Conclusion
Based on the analysis, the correct option for expenses paid in advance is prepaid expenses.
Final Answer
b. Prepaid Expenses is the correct choice.
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