The adjustment entry for the expiration of prepaid advertising,originally recorded as an asset,is

Question

Quizplus · Accepted Answer

The adjustment entry for the expiration of prepaid advertising should decrease the asset account (prepaid advertising) and increase the expense account (advertising expense). Therefore, we need to debit Advertising Expense and credit Prepaid Advertising. Choice A is the correct entry. B is incorrect because there is no cash transaction involved in this adjustment. C is incorrect because the adjustment does not affect cash. D is incorrect because it credits Advertising Expense, which is the opposite of what should happen.

The Adjustment Entry for the Expiration of Prepaid Advertising,originally Recorded