When a Prepaid Expense Is Initially Recorded as an Expense

question 161

Multiple Choice

When a prepaid expense is initially recorded as an expense, the adjusting entry:

• A)transfers the used portion to an asset account.
• B)transfers the unused portion to an asset account.
• C)transfers the used portion to an expense account.
• D)there is no need for an adjusting entry.

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Definitions:

Market Equilibrium

A market state where the supply of goods matches demand, leading to stable prices.

Unskilled Labor

Workers who lack specialized training or qualifications, often performing manual or simple tasks.

Surplus

The amount by which the quantity supplied of a commodity exceeds the quantity demanded at a specific price.

Minimum Wage

The lowest legal hourly pay that workers can be paid by their employers, set by government policy.