The adjusting entry to account for the expiration of prepaid insurance consists of
A) a debit to Insurance Expense and a credit to Prepaid Insurance.
B) a debit to Insurance Expense and a credit to Accumulated Depreciation.
C) a debit to Prepaid Insurance and a credit to Accumulated Depreciation.
D) a debit to Accumulated Depreciation and a credit to Prepaid Insurance.

Question

Quizplus · Accepted Answer

Prepaid insurance is treated as an asset account and has a debit balance. As the insurance coverage period expires, an adjusting entry is made to transfer the amount of the expired insurance from Prepaid Insurance to Insurance Expense, which is a debit to Insurance Expense and a credit to Prepaid Insurance.

The Adjusting Entry to Account for the Expiration of Prepaid