To determine the balance in a prepaid expense account, subtract credits from debits.

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To determine the balance in a prepaid expense account, you need to subtract debits from credits. Prepaid expenses are initially recorded as a debit to the prepaid expense account and a credit to cash. As the expenses are incurred, they are moved from the prepaid account to the appropriate expense account with a debit, which is then offset by a credit to the prepaid account. Therefore, the balance in a prepaid account will be the total of debits minus credits.

To Determine the Balance in a Prepaid Expense Account, Subtract