Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 35 - No. 47)
What happens when a company prepays insurance premiums?
Debit Insurance Expense, Credit Cash
Debit Prepaid Insurance, Credit Cash
Debit Cash, Credit Prepaid Insurance
Debit Insurance Expense, Credit Prepaid Insurance
Explanation
Prepaid insurance (an asset) increases, and cash decreases.
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