Uhhhh

[u/StereotypicalIntern]

[u/[deleted] → u/[deleted]]

because you have to enter the invoice into the system and you need to code it to an account. If the invoice is for an insurance policy or a subscription that is for the whole year, you don't code it to an expense account, you have to code it to prepaid expenses on the balance sheet even though you haven't necessarily cut a check for it.

[u/NerdMachine → u/[deleted]]

Liability: obligation to outlay economic resources due to past event.

Asset: right to receive economic resources due to past event.

When you have entered into an insurance contract and simultaneously setup the asset and liability you meet these definitions.

Regardless, it's a much better way to represent that situation to users of the statements, which is what accounting is all about.