An asset created by prepayment of an insurance premium is:
A) Recorded as a credit to Prepaid Insurance.
B) Recorded as a credit to Unearned Revenue.
C) Recorded as a debit to Prepaid Insurance.
D) Not recorded in the accounting records until the insurance period expires.
E) Recorded as a debit to Unearned Revenue.

Question

Quizplus · Accepted Answer

The asset created by prepayment of an insurance premium is recorded as a debit to Prepaid Insurance, as it represents an amount paid in advance for future coverage. The credit will be recorded in the cash account. Therefore, the correct answer is C.

An Asset Created by Prepayment of an Insurance Premium Is