Question

Initially a prepayment for items such as rent or insurance are recorded as assets and later are recorded as a(n) in the period the benefit expires. (Only one word per blank)

Answer 1

When a prepayment is made, it is recorded as an asset but when the benefit expires, it is recorded as an expense.

What happens to prepayments?

Prepayments for items like rent are considered assets because it means that the provided of those items, owes us for service.

When the benefit expires, these prepayments become expenses because they have to be accounted for as such in the period they expired in.

Find out more on prepayments at https://brainly.com/question/15188252.

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