If a prepaid expense is initially recorded as an expense, the end-of-period adjusting entry records the unexpired portion.

Name: If a prepaid expense is initially recorded as an expense, the end-of-period adjusting entry records the unexpired portion.
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Question

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The adjusting entry at the end of the period is made to reclassify the unexpired portion of the prepaid expense from an expense to an asset, reflecting the correct financial position.

If a Prepaid Expense Is Initially Recorded as an Expense