Asked by Gaurab Dhakal on Jul 06, 2024
Verified
Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a(n)
A) asset
B) liability
C) contra asset
D) stockholders' equity
Prepaid Advertising
An asset account that reflects the cost of advertising paid in advance, which has not yet been utilized or expired.
Balance Sheet
A financial statement that shows the company's assets, liabilities, and shareholders' equity at a specific point in time.
Asset
An economic resource owned or controlled by an individual or business, expected to provide future economic benefits.
- Differentiate between prepaid expenses and the corresponding adjustments in entries.
- Comprehend the principles of deferral and accrual within the accounting framework.
Verified Answer
JA
Jonathan AlexanderJul 11, 2024
Final Answer :
A
Explanation :
Prepaid advertising is considered an asset because it represents future economic benefits that the company will receive, in this case, advertising services that have been paid for in advance but not yet utilized.
Learning Objectives
- Differentiate between prepaid expenses and the corresponding adjustments in entries.
- Comprehend the principles of deferral and accrual within the accounting framework.