How to Ace Prepaid Expenses Questions on Your Exam

Are you consistently losing points on Prepaid Expenses because of recording a 12-month insurance policy as a one-time expense? If so, you're making the exact same error as 80% of your class.

The 3-Step Exam Strategy

1. Isolate: Extract the exact variables from the prompt.
2. Anticipate the Trap: The professor is betting you will end up recording a 12-month insurance policy as a one-time expense. Know this before you write your first line.
3. Execute: Follow the algorithm. For instance: If you pay $12k for a year of insurance in Jan, you record a Prepaid Asset. Each month, you move $1k from the asset account to an expense account..

If you get stuck, do not burn 15 minutes staring at it. Write down the formula, get partial credit, and move on.

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