Prepaid expenses are valued on the Balance Sheet at
Correct answer: D. Cost less expired portion
- A. Replacement cost
- B. Current cost
- C. Cost to acquire less accumulated amortization
- D. Cost less expired portion
Explanation
A prepaid expense represents a future benefit, so the unexpired portion remains as an asset. It is measured at the original cost less the portion that has expired or been consumed.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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