Prepaid expenses appear in the ______section of the balance Sheet?

Prepaid expenses appear in the assets section of the balance sheet. They are classified as current assets because they represent payments made in advance for goods or services that will be received in the future, typically within a year. Prepaid expenses include items such as insurance premiums, rent, and subscriptions that have been paid but not yet incurred as expenses.

Since these payments provide future economic benefits, they are recorded as assets until the expenses are recognized in the income statement when the related services or benefits are utilized. As these expenses are incurred over time, the prepaid expenses account is reduced, and the corresponding expense is recorded in the appropriate period, reflecting the matching principle in accounting.