Question

"which expenses would most likely be classified as prepaid expenses (asset) rather than accrued expenses (liability)?"

Answer 1

Expenses likely to be classified as prepaid expense (asset) are Prepaid Rent & Insurance Premiums. Enter a prepaid rent payment on the balance sheet as an asset until the month when the company is actually using the facility to which the rent relates, and then charge it to expense.   Any insurance premium costs that have not expired as of the balance sheet date should be reported as a current asset such as Prepaid Insurance.

Answer 2

Prepaid expenses are those expenses that are paid for in one accounting period. The first and the foremost example of prepaid expenses (assets) is insurance. Insurance is paid before hand, in advance on many occasions for example, health insurance. Apart from this another example can be rent, you have to pay the rent one month in advance and then live in place. On the other hand accrual expenses are liabilities. Hence these two are the best examples of prepaid expenses.