Purchasing a three-year insurance policy for cash would include a:

Question

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Purchasing a three-year insurance policy for cash would mean that cash is being paid upfront for insurance coverage that will be consumed over the course of three years. Therefore, this would result in a debit to Prepaid Insurance (an asset account) to recognize the amount paid for future insurance coverage, and a credit to Cash (an asset account) to reflect the payment made.

Purchasing a Three-Year Insurance Policy for Cash Would Include A