An increase in prepaid insurance indicates that
A)insurance expense and insurance paid were equal
B)no insurance expense was recorded during the period
C)insurance expense for the period exceeded insurance paid
D)insurance paid during the period exceeded insurance expense

Question

Quizplus · Accepted Answer

An increase in prepaid insurance means that insurance paid during the period exceeded insurance expense. This is because prepaid insurance represents payments for insurance coverage that has not yet been used. As a result, when prepaid insurance increases, it means that more insurance has been paid for than has been recorded as an expense.

An Increase in Prepaid Insurance Indicates That