If Prepaid Expenses Are Initially Recorded in Expense Accounts and Have

question 3

Multiple Choice

If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period then failure to make an adjusting entry will cause

• A) assets to be understated.
• B) assets to be overstated.
• C) expenses to be understated.
• D) contra-expenses to be overstated.

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Definitions:

Examination

The process of inspecting, questioning, or evaluating something or someone in detail.

Aid of Execution

The provision of assistance or enforcement measures by a court to ensure a judgment or court order is carried out effectively.

Enforcement

is the act of compelling compliance or obedience to a law, rule, agreement, or order through legal or authoritative means.

Questioning of Debtor

A legal process in which a debtor is interrogated regarding their financial status and assets, often in the context of enforcing a judgment.