The expired amount of a prepaid expense is recorded as:
A) accrued revenue.
B) a contra asset.
C) a liability.
D) an expense.

Question

Quizplus · Accepted Answer

Prepaid expenses are initially recorded as assets on the balance sheet because they represent future economic benefits. However, as the expense is incurred or the benefit is consumed, it becomes an expense on the income statement. The amount that has expired or been used up is therefore recorded as an expense, not a liability or a contra asset. Accrued revenue refers to revenue that has been earned but not yet received or recognized, so it is not applicable in this scenario.

The Expired Amount of a Prepaid Expense Is Recorded As