When a company makes an end-of-period adjusting entry that includes a credit to Prepaid Rent,the debit is usually made to:
A)Cash.
B)Rent Expense.
C)Rent Payable.

Question

Quizplus · Accepted Answer

Since the adjusting entry includes a credit to Prepaid Rent, it means that the amount of rent paid in advance needs to be reduced and recognized as an expense for the period. Therefore, the debit needs to be made to Rent Expense to decrease the prepaid amount and recognize the expense. The option of Cash is not relevant as there is no cash transaction involved in this journal entry, and the option of Rent Payable would be incorrect as rent payable is usually used for accruals, not prepayments.

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