Adjusting entries for prepayments record the portion of the prepayment that represents the expense incurred or the revenue earned in the current accounting period.

Question

Quizplus · Accepted Answer

This is correct. Adjusting entries for prepayments are made to ensure that the portion of the prepayment that relates to the current accounting period is properly recorded as an expense or revenue. This helps to ensure that financial statements accurately reflect the company's financial position and performance.

Adjusting Entries for Prepayments Record the Portion of the Prepayment