For a prepaid expense, the adjusting entry would
A)Cause a prepaid expense to be overstated and liabilities to be understated.
B)Decrease cash.
C)Result in a debit to an expense account and a credit to an asset account.
D)Result in a debit to a liability account and a credit to an asset account.
E)Result in a credit to an expense account and a debit to an asset account.

Question

Quizplus · Accepted Answer

A prepaid expense is an asset account, and the adjusting entry should decrease the asset account and increase the corresponding expense account. This is accomplished by debiting the expense account (to increase it) and crediting the asset account (to decrease it).

For a Prepaid Expense, the Adjusting Entry Would