Which of the following would appear on the assets side of the balance sheet besides those listed earlier?

• A. Accounts payable
• B. Prepaid insurance
• C. Retained earnings
• D. Sales revenue

Answer: (B)

Prepaid insurance is a prepaid expense that represents a future benefit. On the balance sheet, assets are resources the company owns that will provide value later. Paying for insurance in advance means you’ve paid for coverage you’ll receive in future periods, so that payment shows up as a prepaid insurance asset. Over time, as the insurance coverage is used, that asset is reduced and an insurance expense is recognized.

Accounts payable is a liability, since it’s money the company owes to others. Retained earnings are part of shareholders’ equity, reflecting accumulated profits. Sales revenue appears on the income statement and affects net income (and thus equity) but is not an asset on the balance sheet.

So prepaid insurance is the item that would appear on the assets side.