An asset–expense relationship exists with:Group of answer choicesliability accounts.revenue accounts.prepaid expense adjusting entries.accrued expense adjusting entries.
Question
An asset–expense relationship exists with:Group of answer choicesliability accounts.revenue accounts.prepaid expense adjusting entries.accrued expense adjusting entries.
Solution
An asset–expense relationship exists with:
Prepaid expense adjusting entries.
Here's why:
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Prepaid expenses are costs that have been paid in advance for goods or services that will be received in the future. When these costs are initially paid, they are recorded as assets.
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However, as the goods or services are received over time, the value of the prepaid expense (the asset) decreases. This decrease is recorded as an expense.
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Therefore, an asset-expense relationship exists with prepaid expense adjusting entries. These entries involve debiting (increasing) an expense account and crediting (decreasing) a prepaid expense (asset) account.
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This relationship does not exist with liability accounts, revenue accounts, or accrued expense adjusting entries. These involve different types of accounts and different types of transactions.
Similar Questions
An entry that results in a debit to an expense account and a credit to a related asset account is an example of which category of adjusting entries?*a. accrued expenseb. prepaid expensec. accrued revenued. depreciation expense
The general term for an expense that has not been paid or revenue that has not been received and has not yet been recorded in the accounts is: Group of answer choices contra asset. prepayment. asset. accrual.
The adjusting entry for a prepaid expense includes a debit to a(n) Blank______ account and a credit to a(n) Blank______ account.Multiple choice question.liability; revenuerevenue; liabilityasset; expenseexpense; asset
As prepaid expenses expire with the passage of time, the correct adjusting entry will be: Group of answer choices Debit an asset account; Credit an expense account. Debit an expense account; Credit an asset account. Debit an asset account; Credit an asset account. Debit an expense account; Credit an expense account.
_____ is a noncash expense that specifically recognizes that assets decline in value over time.Group of answer choicesAscensionDepreciationDividend payableNotes payable
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