Which of the following statements about prepaid insurance is true?

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter5: Completing The Accounting Cycle
Section: Chapter Questions
Problem 2MC: Which of the following accounts is considered a permanent or real account? A. Interest Revenue B....
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7. Which of the following statements about prepaid insurance is true?
a. Prepaid insurance is debited by the client when cash is paid in advance to the insurance company.
b. Insurance expense will be credited when a portion of the insurance has already expired.
The adjusting entry in relation to insurance will decrease equity, and will decrease assets.
d. All of the statements are true.
C.
Transcribed Image Text:7. Which of the following statements about prepaid insurance is true? a. Prepaid insurance is debited by the client when cash is paid in advance to the insurance company. b. Insurance expense will be credited when a portion of the insurance has already expired. The adjusting entry in relation to insurance will decrease equity, and will decrease assets. d. All of the statements are true. C.
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