The adjusting entry for expired or used insurance will increase the Insurance Expense account.

Question

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When an insurance policy expires or is used up, it is considered as a cost incurred by the company and needs to be recognized in the books of accounts. An adjusting entry is made to debit the Insurance Expense account, and credit the Prepaid Insurance account. This indicates that the company has incurred an expense during the period and has reduced the asset (prepaid insurance) representing the unused portion of the insurance policy.

The Adjusting Entry for Expired or Used Insurance Will Increase