Prepaid expenses are eventually expected to become
A) expenses when their future economic value expires or is used up
B) revenues when services are performed
C) expenses in the period when they are paid
D) revenues when the liability is no longer owed

Question

Quizplus · Accepted Answer

Prepaid expenses represent payments made for expenses that will provide economic benefits beyond the current accounting period. These economic benefits are typically consumed or used up over a period of time, or when a certain event takes place. As the economic benefits are used up, the prepaid expense becomes an expense and is recognized on the income statement. Therefore, prepaid expenses are eventually expected to become expenses when their future economic value expires or is used up.

Prepaid Expenses Are Eventually Expected to Become