Purchasing a six-month insurance policy results in a debit to insurance expense and a credit to cash at the date of purchase.

Name: Purchasing a six-month insurance policy results in a debit to insurance expense and a credit to cash at the date of purchase.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Purchasing a six-month insurance policy results in a debit to prepaid insurance (an asset account) and a credit to cash. Insurance expense is recognized as the insurance is used over the six-month period, not at the time of purchase.

Purchasing a Six-Month Insurance Policy Results in a Debit to Insurance