Team Shirts has $200 in its Prepaid insurance account on June 30.This amount is for insurance for July and August.It represents a ________.
A)current asset
B)long-term asset
C)current liability
D)long-term liability

Question

Quizplus · Accepted Answer

The prepaid insurance account is a current asset because it represents an expense that has been paid for in advance and will be used within the current accounting period (July and August). It is not a long-term asset because its usefulness will be exhausted in the short term. It is also not a liability because it represents a prepaid expense, not an amount owed to another party.

Team Shirts Has $200 in Its Prepaid Insurance Account on June