When a tenant makes an end-of-period adjusting entry credit to the "Prepaid rent" account:
A)(S)he usually debits cash.
B)(S)he usually debits an expense account.
C)(S)he debits a liability account.
D)(S)he does none of these.

Question

Quizplus · Accepted Answer

When a tenant makes an end-of-period adjusting entry credit to the "Prepaid rent" account, they are recognizing that the prepaid rent has now been used up and needs to be expensed. Therefore, they would debit an expense account, such as "Rent expense," to recognize the expense and reduce the prepaid asset. They would not debit cash since this was already paid at the time the prepaid rent was recorded. They would also not debit a liability account since the liability was already reduced at the time the prepaid rent was recorded.

When a Tenant Makes an End-Of-Period Adjusting Entry Credit to the "Prepaid