Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 4 - Accrual Accounting Concepts - Self-Test Questions: 8

Answer

c

Work Step by Step

A prepaid expense is initially recorded as an asset since it represents an obligation to the company. Once the prepaid item is used, an adjusting entry decreases the assets and increases the expense account.
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