During the accounting period, an expense paid in advance and debited to prepaid expense was $180; therefore, the adjusting entry for the expiration of this item should be to debit an expense account for $180 and credit a prepaid expense account for $180.

Question

Quizplus · Accepted Answer

This is the correct adjusting entry for the expiration of a prepaid expense. The prepaid expense account is credited because it decreases as the expense is recognized, and the expense account is debited because it increases as the expense is recognized.

During the Accounting Period, an Expense Paid in Advance and Debited