An adjustment to a prepaid expense is required to recognize expired costs.

Name: An adjustment to a prepaid expense is required to recognize expired costs.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Prepaid expenses represent costs that have been paid in advance and are yet to be consumed. As time passes, a portion of the prepaid expense expires and becomes an expense that must be recognized in the income statement. Therefore, an adjustment is required to recognize expired costs.

An Adjustment to a Prepaid Expense Is Required to Recognize