As prepaid expenses expire with the passage of time the correct adjusting entry will be a
A) debit to an asset account and a credit to an expense account.
B) debit to an expense account and a credit to an asset account.
C) debit to an asset account and a credit to an asset account.
D) debit to an expense account and a credit to an expense account.

Question

Quizplus · Accepted Answer

Prepaid expenses are initially recorded as assets, but as they expire with the passage of time, they are no longer assets and become expenses. Therefore, the correct adjusting entry will be a debit to an expense account and a credit to an asset account. This reflects the decrease in the value of the asset and the recognition of the expense incurred.

As Prepaid Expenses Expire with the Passage of Time the Correct