On July 1,Team Shirts paid $600 for three months' worth of advertising beginning on July 1.What is the balance in the Prepaid advertising account at July 31?
A)$0
B)$200
C)$400
D)$600

Question

Quizplus · Accepted Answer

Since the advertising was paid for three months beginning on July 1, it covers July, August, and September. However, at July 31, only one month (July) has passed. Therefore, only one-third of the prepaid expense has been used up, leaving a balance of $400 (two-thirds of the original $600).

On July 1,Team Shirts Paid $600 for Three Months' Worth