The entry to record a prepaid expense involves the following steps:
1.Debit the Prepaid Expense account for the amount paid.
2.Credit the Cash or Bank account for the amount paid.
When the expense is incurred, the prepaid asset is recognized as an expense in the income statement, and the entry to record this is:
1.Debit the Expense account for the amount incurred.
2.Credit the Prepaid Expense account for the same amount.
