If a Company Records Prepayment of Expenses in an Asset

question 207

Multiple Choice

If a company records prepayment of expenses in an asset account, the adjusting entry would:

• A) Result in a debit to an expense and a credit to an asset account.
• B) Cause an adjustment to prior expense to be overstated and assets to be understated.
• C) Cause an accrued liability account to exist.
• D) Result in a debit to a liability and a credit to an asset account.
• E) Decrease cash.

---

Definitions:

Government Documents

Official publications issued by a government, including reports, policies, and legal documents.

Library Catalogs

Systematic lists or databases of books, journals, and other materials found in a library.

Semiconductor Industry

A sector of the economy that produces semiconductor devices and materials used in electronic components and systems.

Encyclopedia

a comprehensive reference work containing information on a wide range of subjects or specialized topics.