An asset created by a payment for economic benefits that does not expire until some later time is:
A)Recorded as a debit to an unearned revenue account.
B)Recorded as a credit to a prepaid expense account.
C)Recorded as a credit to an unearned revenue account.
D)Recorded as a debit to a prepaid expense account.
E)Not recorded in the accounting records.

Question

Quizplus · Accepted Answer

An asset created by a payment for economic benefits that does not expire until some later time is recorded as a debit to a prepaid expense account. This is because the payment made is for an expense that will be incurred at a later time, and thus is considered a prepaid expense. Recording it as a debit to a prepaid expense account allows for the expense to be recognized as it is incurred over time, rather than all at once when the payment is initially made.

An Asset Created by a Payment for Economic Benefits That