Red Onion Restaurant would classify a six-month prepaid insurance policy as:

Question

Quizplus · Accepted Answer

A six-month prepaid insurance policy is a current asset because it represents a future economic benefit that the company has paid for in advance and will be consumed within the next year. It is not property, plant, and equipment because it is not a tangible asset used in production or operation. It is not an investment or goodwill because it does not represent ownership in another company or intangible assets like brand recognition.

Red Onion Restaurant Would Classify a Six-Month Prepaid Insurance Policy