If prepaid costs are initially recorded as an asset no adjusting entries will be required in the future.

Question

Quizplus · Accepted Answer

Prepaid costs represent expenses that have been paid in advance and are not yet incurred. They are initially recorded as assets because they provide future economic benefits. However, as time passes and the benefits are consumed, the assets decrease and the expenses increase. Therefore, adjusting entries will be needed in the future to reflect the actual expense incurred during the period.

If Prepaid Costs Are Initially Recorded as an Asset No