Final answer:
The type of entry that adjusts an amount that was paid or received in advance of it becoming an expense or revenue is called a prepaid expense or unearned revenue. A prepaid expense occurs when a business pays for goods or services in advance but has not yet received or used them. Unearned revenue refers to when a business receives payment from a customer before delivering goods or services.
Step-by-step explanation:
The type of entry that adjusts an amount that was paid or received in advance of it becoming an expense or revenue is called a prepaid expense or unearned revenue.
A prepaid expense occurs when a business pays for goods or services in advance but has not yet received or used them. An example of a prepaid expense is when a company pays for a year's worth of insurance coverage upfront.
Unearned revenue refers to when a business receives payment from a customer before delivering goods or services. An example of unearned revenue is when a company receives payment for a magazine subscription before the issues are delivered.