"I take the appointment process very seriously," Kishida told reporters, adding that he "brings his sincere apologies" to the people, when commenting on the situation.
The new internal affairs and communications minister will be appointed on Monday morning.
Terada has become the third minister in Kishida’s cabinet to be dismissed in the past few weeks. In mid-November, the Japanese prime minister dismissed Justice Minister Yasuhiro Hanashi over his controversial statements about duties related to signing death sentences, which sparked criticism among Japan's opposition parties. Economic Revitalization Minister Daishiro Yamagiwa resigned at the end of October over his ties with the Unification Church, which has been in the spotlight following the assassination of former Prime Minister Shinzo Abe.
Terada has found himself at the center of a scandal after Japanese media reported that the politician had filed "false information" about his gasoline payments and other positions related to the election campaign for the lower house of parliament in 2021. A total of 1 million yen ($7,100) was paid in his name by one of his supporting groups.