Asset prepayments become expenses when they expire.

Name: Asset prepayments become expenses when they expire.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Asset prepayments are initially recorded as assets on the balance sheet but become expenses when they are used or consumed, or when their benefit period expires. This is referred to as the matching principle in accounting, which requires expenses to be recognized in the same period as the related revenue or benefit.

Asset Prepayments Become Expenses When They Expire