If a company records prepayment of expenses in an asset account, the adjusting entry when all or part of the prepaid asset is used or expired would:
A. Cause an adjustment to prior expense to be overstated and assets to be understated.
B. Result in a debit to a liability and a credit to an asset account.
C. Decrease cash.
D. Result in a debit to an expense and a credit to an asset account.
E. Cause an accrued liability account to exist.
Answer: D
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