Chapter 3, Problem 9DQ

(a)

To determine

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).

Prepaid expenses:

The prepaid expenses are those expenses which are paid in advance, before they are incurred. These are treated as asset for the business.

To determine: The rights acquired at November 1 represents an asset or an expense.

(b)

To determine

To justify: The reason for debiting the rent expense at the time of payment.