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 represent costs that have been paid in advance but have not yet been incurred. As time passes, these costs are recognized as expenses. Therefore, the correct adjusting entry is to debit the expense account (to increase it) and credit the asset account (to decrease it). This is represented by option B, which debits an expense account and credits an asset account.

As Prepaid Expenses Expire with the Passage of Time, the Correct