Allocating Operating Costs Insurance Expense XX Prepaid Insurance XX 4. Valuation of Liabilities Unearned Revenues XX Subscription Revenue XX 4. Revenues recognized when goods are delivered, services rendered. Expenditure eventually becomes an expense. When an asset is used up or consumed in a business.
Some people call expense expired assets or assets unexpired costs.
Remember, so far we have classified assets in two categories current and noncurrent, tangible and intangible. A third classification scheme consists of monetary and nonmonetary assets. Assets considered cash or are stated in an amount to be collected in cash. Since most receivables are collected in 1 - 3 months, they are recorded as current assets and stated as the total cash collected.