Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 43 - No. 27)
If a company pays for a one-year insurance policy in advance, how is this initially recorded?
Debit Insurance Expense; Credit Cash
Debit Prepaid Insurance; Credit Cash
Debit Cash; Credit Prepaid Insurance
Debit Insurance Expense; Credit Prepaid Insurance
Explanation
Prepaid insurance is an asset until it is used up.
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