Question

Prepaid expenses are eventually expected to become expenses when their future economic value expires. become revenues when services are performed. become expenses in the period when they are paid. become revenues when the liability is no longer owed.

Answer 1

Prepaid expenses are eventually expected to become expenses when their future economic value expires.

A common example of prepaid expenses are insurance/insurance polices because they are something you pay for in advance even though you may not need until a time in the future. Prepaid rent is also a prepaid expense because you are paying in advance for a future month. These items until used are considered an asset to the company.