In Adjusting for a Prepayment, the Expense Account Needs to Be

question 11

Multiple Choice

In adjusting for a prepayment, the expense account needs to be ________ and an asset account needs to be ________.

• A)set up; credited
• B)set up; reduced
• C)credited; debited
• D)debited; credited

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Definitions:

Tax Benefits

Refers to reductions in tax liability granted to taxpayers by the government, typically for certain activities or investments such as education expenses, retirement savings, or home ownership.

Single Life Annuity Contract

A Single Life Annuity Contract is an annuity that pays out a fixed or variable income stream to an individual for their lifetime, with payments ceasing upon their death.

Expected Return

The forecasted amount of profit or loss from an investment over a specific period.

Nondeductible Contributions

are contributions made to certain retirement accounts or plans that cannot be deducted from the taxpayer's income.