00:02
Hello, in this video we're going to identify the correct adjusting entry if we initially record our prepaid expense using an expense account.
00:17
So what will be our adjusting entry that shall be made at the end of the financial period.
00:24
So there are actually two ways to record your prepaid expense.
00:29
To journalize it first, we have then asked.
00:32
Method where you initially record it as an asset like a debit to your okay let me just present this one it in asset method you debit your prepaid expense account okay i'm sorry prepaid expense account and then you credit the corresponding expense account like if it's an insurance expense or a supplies expense okay but the problem we are told that the prepaid expense was initially measured using an expense account so therefore it is the expense method in the expense method of according your prepaid expense the accountant initially records the entire payment as expense so if the expense method was used, the entry would have been a debit to your expense account.
01:52
It could be an insurance expense, a supplies expense, okay, depends.
01:58
And a credit to your cash.
02:01
You're recording, again, you're recording the entire payment as expense...