The adjusting entry to record prepaid rent after the company has used the rented property for the rental period accomplishes which of the following?
A) Decreases an asset and increases an expense
B) Decreases a liability and increases an expense
C) Decreases a liability and increases a revenue
D) Increases an asset and increases an expense

Question

Quizplus · Accepted Answer

The adjusting entry for prepaid rent involves decreasing the prepaid rent asset account (since the benefit of the rent has been consumed) and increasing an expense account (to reflect the cost of using the rented property during the period), thus decreasing an asset and increasing an expense.

The Adjusting Entry to Record Prepaid Rent After the Company