Answer:
Prepaid expenses are payments made in advance for goods or services that will be received or used in the future. These expenses are considered assets on a company's balance sheet because they provide future economic benefits. Examples of prepaid expenses include rent payments made in advance, insurance premiums, and prepaid service contracts. They are recorded as an asset on the company's balance sheet until the expense is incurred, at which point it is recognized as an expense on the income statement.
Explanation: