Question

What do you understand by prepaid expenses?

• A. Amount which has been paid for a relative
• B. Expenses paid within the accounting period, but benefits are reaped later
• C. Expenses which have been paid for a subsidiary company
• D. Expenses which have been paid for household purposes

Answer 1

The correct option is B

Expenses paid within the accounting period, but benefits are reaped later

Prepaid expenses are expenses paid within the accounting period, but benefits are reaped later.