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 debit to a prepaid expense account.
C) Recorded as a credit to an unearned revenue account.
D) Recorded as a credit 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 prepaid expense account. This is because the payment has been made in advance for an economic benefit that will be received in the future. The expense is not yet incurred, but the payment has already been made, so it is recorded as an asset until the benefit is received, at which point it is recognized as an expense. The other choices, such as unearned revenue, do not apply in this scenario as they refer to payments received from customers for goods or services that have not yet been provided.

An Asset Created by a Payment for Economic Benefits That