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Which of the following are accurate statements regarding how to report or treat prepaid accounts? (Check all that apply.)-The expired portion of prepaid accounts is reported on the income statement as an expense.
-The expired portion of prepaid accounts is treated as liabilities.
-Over time, the expired portion of prepaid accounts is removed from the account and reported as an expense.
-The unexpired portion of prepaid accounts are treated as assets.Answer: The unexpired portion of prepaid accounts are treated as assets.Over time, the expired portion of prepaid accounts is removed from the account and reported as an expense.The unexpired portion of prepaid accounts are treated as assets.The expired portion of prepaid accounts is reported on the income statement as an expense.

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TanuSharma

The following accurate statements regarding to report or treat prepaid accounts are:

  1. The unexpired portion of prepaid accounts are treated as assets.
  2. Over time, the expired portion of prepaid accounts is removed from the account and reported as an expense.
  3. The unexpired portion of prepaid accounts are treated as assets.
  4. The expired portion of prepaid accounts is reported on the income statement as an expense.

How Are Prepaid accounts Tracked?

Due to the fact that they represent an expected future benefit for the company, prepaid costs/accounts are listed first on the balance sheet in the prepaid asset account. The fact that prepaid costs are anticipated to be consumed, utilised, or spent via regular company activities within a year qualifies them as current assets.

It is recorded on the income statement as benefits from the prepaid cost are realised. Prepaid expenses are not originally shown on the income statement because, in accordance with the matching principle of generally accepted accounting principles (GAAP), expenses cannot be reported on the income statement prior to incurrence.

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