Q 22RQ - Horngren'S Financial And Managerial Accounting

Question

If a payment of a deferred expense was recorded under the alternative treatment, what account would be debited at the time of payment?

Step-by-Step Solution

Answer

Expense account   is debited.  

Step-by-Step Solution Step 1: Explanation on Deferred Expense

Deferred expense refers to the advance payment of the expenses. 

Step 2: Alternative Treatment of Deferred Expense

Under the alternative treatment, deferred expense is recorded by debiting expense account and crediting cash account for the amount paid. And at the year end, adjusting entry is recorded by debiting prepaid expense and credting expense account for the unexpired portion of expense.