Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 34 - No. 49)
What must be done to account for prepaid expenses at the end of an accounting year?
Debit the prepaid expense account and credit the expense account.
Credit the prepaid expense account and debit the expense account.
Ignore the prepaid expense.
Reverse the original entry.
Explanation
To recognize the portion of the prepaid expense used during the accounting period, you must credit the prepaid expense account and debit the expense account.
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