Question

Prepaid expenses often occur in regard to _______?

1) Purchasing inventory
2) Receiving payments
3) Making sales
4) Accruing expenses

Answer 1

Prepaid expenses often occur in regard to making sales. When a company receives payment in advance for goods or services that it will provide in the future, it records the payment as a prepaid expense.

Step-by-step explanation:

Prepaid expenses often occur in regard to making sales. When a company receives payment in advance for goods or services that it will provide in the future, it records the payment as a prepaid expense. This is because the company has not yet delivered the goods or services, but has already received the payment for them.