If a Company Records Prepayment of Expenses in an Asset

question 107

Multiple Choice

If a company records prepayment of expenses in an asset account,the adjusting entry when all or part of the prepaid asset is used or expired would:

• A)Result in a debit to an expense and a credit to an asset account.
• B)Cause an adjustment to prior expense to be overstated and assets to be understated.
• C)Cause an accrued liability account to exist.
• D)Result in a debit to a liability and a credit to an asset account.
• E)Decrease cash.

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Definitions:

Bar Chart

A graphical representation of data using bars of varying heights or lengths to show the values across different categories.

Frequency Polygon

A graphical representation of the distribution of a dataset that uses lines connecting points representing the frequencies of respective values.

Initial Understanding

The foundational or basic comprehension of a concept, phenomenon, or situation before further, deeper learning takes place.

Dependent Variables

Variables in an experiment that are expected to change as a result of changes made to the independent variables.