Prepaid Expenses Require What Type of Adjusting Entry
Prepaid Expenses or Expenses Paid In Advance required adjusting entry according to Matc h ing Concept Gaap as revenues of t h e same period must b e match ed wit h t h e expenses of t h e same period incurred in earning t h ese revenues. If we initially recorded as prepaid expense and later on, w he n we received services or b e nefits against t h e payment, we deb it the releva nt expense account e.g., Ren t Expense Account and credit Prepaid Ren t Account w hich is expired for that particular accou nting period. So, we matc h re nt expense account wit h the re venues of t hat specific accou nting period b y recordi ng rent expense account in Income Statement. T h e entry is s how n b elow: Prepaid Expe nses a/c XXX ...