If a Company Records Prepayment of Expenses in an Asset

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.