Prepaid expenses refer to those expenses which have been ___________________.

Paid but not incurred during the current accounting period.

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Incurred but not incurred during the current accounting period.

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Incurrent but not paid during the previous accounting period.

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Paid but not paid during the previous accounting period.

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Solution

The correct option is B Paid but not incurred during the current accounting period.
Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired.

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It is a statement which shows the comparison of the total income earned and expenses incurred during two or more accounting periods.

Roshan,a Chartered Accountant earned Rs.12,00,000 during the financial year 2015-2016,out of which he received Rs.10,50,000.He incurred expenses of Rs.5,10,000,out of which Rs.1,20,000 are outstanding.He also received his fees relating to previous year Rs.1,35,000 and also paid Rs.60,000 due on expenses of last year.Find out Roshan's income for 2015-2016 following the cash basis and accrual basis of accounting.

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Prepaid expenses refer to those expenses which have been ___________________.

The correct option is B Paid but not incurred during the current accounting period.Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired.

The correct option is B Paid but not incurred during the current accounting period.
Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired.