If a prepaid expense is initially recorded as an asset, the end-of-period adjusting entry records the expired portion.

Name: If a prepaid expense is initially recorded as an asset, the end-of-period adjusting entry records the expired portion.
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Prepaid expenses are initially recorded as assets because they provide future economic benefits. At the end of the period, an adjusting entry is made to recognize the portion that has expired as an expense, reducing the asset account.

If a Prepaid Expense Is Initially Recorded as an Asset