Question

Which of the following is the correct entry for Advance Payments made to Creditors?

Answer 1

Answer:

Give the options first.

Answer 2

Answer:

Any payments made in advance are recorded as a prepaid expense in accrual accounting for the entity issuing the advance. Advances are generally recorded as assets on the balance sheet. As these assets are used they are expended and recorded on the income statement for the period in which they are incurred.