Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 31 - No. 8)
What is the effect on the balance sheet when the adjusting entry for prepaid insurance is made?
Decrease in assets.
Increase in assets.
Increase in liabilities.
No effect on assets or liabilities.
Explanation
The Prepaid Insurance is an asset, and the adjusting entry decreases this.
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