The Adjusting Entry for a Prepaid Expense Always Involves A(n)

question 34

Multiple Choice

The adjusting entry for a prepaid expense always involves a(n) :

• A) asset account and a liability account
• B) expense account and an asset account
• C) expense account and a liability account
• D) liability account and a revenue account

---

Definitions:

Days' Sales

A measure that indicates how many days, on average, it takes a company to collect revenue after a sale has been made.

Retail Method

An estimating method used to calculate inventory cost, based on the retail price, to determine cost of goods sold and ending inventory.

Inventory Estimating

A method used to approximate the amount of inventory a business has without doing a detailed physical count, often applied in periodic inventory systems.

Merchandise Prices

The set prices at which goods are sold to consumers, influencing revenue, profit margins, and competitive positioning.