When a company makes an end-of-period adjusting entry which includes a credit to Prepaid Rent, the debit is usually made to:

Question

Quizplus · Accepted Answer

When a company makes an end-of-period adjusting entry which includes a credit to Prepaid Rent (an asset account that represents rent paid in advance), the corresponding debit is made to Rent Expense to reflect the portion of the prepaid rent that has been used during the period. This entry reduces the asset balance and increases the expense account, resulting in a more accurate representation of the company's financial position and performance. Option A is incorrect because the payment has already been made, so there is no need to debit Cash (an asset account). Option C is incorrect because Rent Payable is a liability account that represents rent owed but not yet paid, and it's not relevant to the situation described. Option D is incorrect because Rent Receivable is an asset account that represents rent owed to the company, but it's not the account that needs to be debited in this case.

When a Company Makes an End-Of-Period Adjusting Entry Which Includes