An adjusting entry to a prepaid expense
A) is not required in the future if prepaid costs are initially recorded as an asset.
B) reduces a company's liabilities.
C) is required to recognize costs that expire with time.

Question

Quizplus · Accepted Answer

An adjusting entry to a prepaid expense is required to recognize costs that expire with time, ensuring that expenses are matched with the revenues they help to generate.

An Adjusting Entry to a Prepaid Expense