It Is Acceptable to Record Prepayment of Expenses as Debits

question 232

True/False

It is acceptable to record prepayment of expenses as debits to expense accounts if an adjusting entry is made at the end of the period to bring the asset account balance to the correct unused or unexpired amount.

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Definitions:

Accounts Payable

Liabilities owed by a business to creditors for goods and services purchased on credit.

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Raw Materials

The basic materials from which products are manufactured or made.

Accounts Payable

The amounts a company owes because it purchased goods or services on credit from a supplier or vendor.