Payments made on claims should be:

Question

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Payments made on claims should only be treated as an expense in the period if the claim is settled in that period and used to reduce the liability for claims settled in previous periods. This is because the payment represents a reduction in the company's liabilities for claims made in earlier periods, and is therefore not a true expense for the current period. Only if the payment is made in the same period as the claim is settled should it be treated as an expense for that period, as it represents an actual cost to the company.

Payments Made on Claims Should Be