What type of expense might you categorize prepaid property taxes as on a balance sheet?

Prepaid property taxes are categorized as a current asset on a balance sheet. This classification is correct because prepaid expenses represent payments made in advance for services or goods to be received in the future. Since property taxes are typically paid before the tax period begins and the benefits of these payments are realized within one year or within the operating cycle of the business, they are expected to be consumed or used up relatively soon.

By accounting for prepaid property taxes as a current asset, businesses provide a clearer picture of their financial position, indicating that there is an asset that will convert into an expense in the near term. This practice aligns with the matching principle of accounting, which seeks to match revenues with the expenses incurred to generate them during the same accounting period.