If a company initially records a prepaid expense as an asset, an adjusting entry must be made at the end of the period to increase the expense account.

Name: If a company initially records a prepaid expense as an asset, an adjusting entry must be made at the end of the period to increase the expense account.
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Question

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An adjusting entry is needed to transfer the appropriate portion of the prepaid expense from the asset account to the expense account as the benefit is consumed over time.

If a Company Initially Records a Prepaid Expense as an Asset