When it paid its insurance in advance,a company recorded Prepaid Insurance.As of the end of the accounting year,the prepayment had expired.If no adjustment is made to record this expiration,which of the following will occur?

Question

Quizplus · Accepted Answer

The related adjusting entry would include a debit to Insurance Expense and a credit to a Prepaid Insurance,an asset.If that entry is not prepared,assets will be overstated and expenses will both be understated.

When It Paid Its Insurance in Advance,a Company Recorded Prepaid