impact on the accounting equation would be: D. Decrease assets, increase assets The entry would be: Prepaid expenses Debit Cash Credit Prepaid expense are assets and there value would increase and the value of another asset; cash would decrease. Solution impact on the accounting equation would be: D. Decrease assets, increase assets The entry would be: Prepaid expenses Debit Cash Credit Prepaid expense are assets and there value would increase and the value of another asset; cash would decrease..