Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 9 - No. 44)
Which statement correctly summarizes the impact of prepaid expenses?
Debit prepaid expenses; credit cash.
Debit prepaid expenses; credit expense.
Debit expense; credit prepaid expenses.
Debit cash; credit prepaid expenses.
Explanation
Prepaid expenses are an asset, and the initial payment reduces cash.
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