The adjusting entry for a prepaid expense always includes a debit to an expense account and a credit to a liability account.The credit is to an asset account.

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This is because prepaid expenses are initially recorded as assets, but as time passes, they become expenses. Therefore, the adjusting entry for a prepaid expense involves decreasing the asset account (credit) and increasing the expense account (debit), as well as crediting the liability account (representing the portion of the prepaid expense that has not yet been used up).

The Adjusting Entry for a Prepaid Expense Always Includes a Debit