Final answer:
At the end of an accounting period, an adjustment for a prepayment causes a decrease in the asset account and an increase in the expense account, reflecting the consumption of the prepaid service or benefit.
Step-by-step explanation:
A prepayment is originally recorded as an asset because it represents a service or benefit that will be received in the future. Later, at the end of the accounting period, an adjustment is recorded to reflect the portion of the prepayment that has been used up or expired. This adjustment causes a decrease in the asset account and an increase in the expense account.
Therefore, the correct answer to the question is B) Decrease; Increase. By decreasing the prepaid asset, the accounting records reflect that a portion of the services or benefits has been consumed, and by increasing the expense, it reflects that those services or benefits are now being recognized as an expense in the current period's income statement.