Paying of prepaid expenses tend to:

Option B is the answer i.e. increase current assets.

Answer :- B- increase current assets

The correct Answer is B

B- increase current assets 

Sir. Neither the question nor the choices are appropriate. What does it mean paying prepared expense? Prepared Asset (not expense) arise when you first payed a cash for a period of less or more than12 months. There is no subsequent cash payment to the account unless you made another different contract. Prepared expense will arise and decrease the asset periodically by accruing the expired portion of the prepayment. Here also no cash involvement in the transaction. Most accountants including me use the term prepayed expense to express prepaid asset. We have to correct ourselves and use the right term.

Option.................................

B- Increase Current Assets.

I think none of the above as prepaid exp dr to cash. so overall it will nt impact the current asset status.

b) Increase current assets; as in the Statement of Financial Position it is included under "trade receivables" or "other current assets" if the balance is significant.

Answer: A prepaid expense has no effect on long term assets, current assets and equity. an example is when the company paid an insurance as prepaid.. The entry is debit to prepaid Insurance and a credit to cash account. No effect to long term since prepayments are current only, no effect in current assets since a debit and a credit to current assets will became offsetting and equity has nothing to do with the payment in prepaid expense

B - Increase current assets. As in balance sheet it will be recorded as Debit other receivables.

It's "increase current assets"

Answer is

>>B)Current asset