Double-entry violation in prepaid expense recording

Steps:

• Double-entry requires balanced debits and credits for every transaction, with logical account pairings.
• For prepaid expenses, initial payment debits an asset (prepaid) account, not expense; year-end adjustment debits expense only for the used portion, crediting prepaid.
• Option A incorrectly implies direct debit to expense for a prepaid item, lacking asset recognition and proper credit.
• Other options describe valid single-sided entries with standard counterparts.

Why A is correct:

• Prepaid expenses follow accrual basis (IAS 1 or basic principles): record as assets initially to match expenses with revenue periods, not immediate expensing.

Why the others are wrong:

• B: Valid; personal asset introduction debits fixed assets, credits capital to reflect owner investment.
• C: Valid; vehicle sale debits accumulated depreciation to clear it, with credits to asset account and cash/receivables.
• D: Valid; goods drawings debit drawings account, credit purchases/inventory to reduce business stock.

Final answer: A