When do you adjust the amount of prepaid expenses?
When you receive an advance payment, you’ll record it as a liability in the Deffered Revenue account because you still owe the customer the product or service. Debit Cash (because money just rolled in—woohoo!) and credit Unearned Revenue. As you fulfill your obligation over time, you’ll make adjusting entries to debit Unearned Revenue (decreasing your […]
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