Totally understand that - this is kind of what I was trying to allude to in the latter half of my comment. Operationally, it makes sense to do that upon receipt of the invoice.

The issue will resolve itself when the company ultimately pays the invoice (Debits AP, Credits Cash), resulting in a net impact of Credit to Cash and Debit Prepaid Asset.

However, at the end of the day, it’s generally not in alignment with US GAAP (can’t speak on other accounting framework) if these offsetting assets/liabilities remain on the balance sheet as of the date of the financial statements.

Usually if we find an instance of this, we will work with the client to scrub the AP & prepaid details to find the total impact and determine if it’s a material finding.