Prepayments must always be debited to an asset account and credited to a liability account.

Name: Prepayments must always be debited to an asset account and credited to a liability account.
Brand: Quizplus
Rating: 4.9 (34 reviews)

Question

Quizplus · Accepted Answer

Prepayments are debited to an asset account because they represent a future economic benefit, but they are not always credited to a liability account. Instead, they are typically credited to a cash account or the account from which the payment was made.

Prepayments Must Always Be Debited to an Asset Account and Credited