Asset prepayments become expenses when they expire.

Name: Asset prepayments become expenses when they expire.
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Question

Quizplus · Accepted Answer

Asset prepayments are initially recorded as assets because they represent future expenses that have been paid in advance. As time passes, the prepaid asset is gradually used up, and the related expense is recognized. When the prepaid asset has been fully consumed or expired, it becomes an expense that is recognized on the income statement.

Asset Prepayments Become Expenses When They Expire