Which of the following is an example of a deferred (prepaid) expense?
- A Wages owed but not yet paid
- B Insurance premium paid in advance for the next year
- C Interest earned but not received
- D Revenue billed but not collected
Answer
Insurance premium paid in advance for the next year
A prepayment is cash paid before the benefit is consumed, so it is recorded as an asset and expensed over the period it covers.





