The name prepaid expense implies that this type of account is an expense account and belongs on

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The name "prepaid expense" implies that this type of account is an expense account and belongs on an income statement. However, these accounts actually appear on the statement of financial position as assets. Explain

(a) Why prepaid expense items are assets.

(b) Why they require adjustment at the end of each period.

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Related Book For answer-question

Financial Accounting Tools for Business Decision Making

ISBN: 978-1118644942

6th Canadian edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

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Question Posted: Jan 11, 2017 09:51 AM

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The name prepaid expense implies that this type of account is an expense account and belongs on

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a Prepaid expenses are assets because they have a future benefit since they were ...View the full answer

Financial Accounting Tools for Business Decision Making

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