Which of the following entries records the payment of insurance for the current month?
A) Cash, debit; Insurance Expense, credit
B) Insurance Expense, debit; Cash, credit
C) Insurance Expense, debit; Accounts Receivable, credit
D) Prepaid Insurance, debit; Cash, credit

Question

Quizplus · Accepted Answer

The correct entry for recording the payment of insurance for the current month involves debiting Insurance Expense (to recognize the expense in the current period) and crediting Cash (to reflect the outflow of cash). This aligns with the accrual basis of accounting, where expenses are recognized when incurred, not necessarily when paid.

Which of the Following Entries Records the Payment of Insurance