Which of the following journal entries correctly records paying for a $900 one year insurance policy in advance?
A) $\begin{array} { | c | r | r | }
\hline \text { Insurance expense } & 900 & \
\hline \text { Prepaid insurance } & & 900 \
\hline
\end{array}$
B) $\begin{array} { | c | r | r | }
\hline \text { Prepaid insurance } & 900 & \
\hline \text { Insurance payable } & & 900 \
\hline
\end{array}$
C) $\begin{array} { | c | r | r | }
\hline \text { Insurance expense } & 900 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$
D) $$\begin{array} { | c | r | r | }
\hline \text { Prepaid insurance } & 900 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$$

Question

Which of the following journal entries correctly records paying for a $900 one year insurance policy in advance?
A) $\begin{array} { | c | r | r | } 
\hline \text { Insurance expense } & 900 & \
\hline \text { Prepaid insurance } & & 900 \
\hline
\end{array}$
B) $\begin{array} { | c | r | r | } 
\hline \text { Prepaid insurance } & 900 & \
\hline \text { Insurance payable } & & 900 \
\hline
\end{array}$
C) $\begin{array} { | c | r | r | } 
\hline \text { Insurance expense } & 900 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$
D) $$\begin{array} { | c | r | r | } 
\hline \text { Prepaid insurance } & 900 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$$

Quizplus · Accepted Answer

When paying for an insurance policy in advance, the correct entry is to debit Prepaid Insurance and credit Cash, reflecting the prepayment and cash outflow respectively.

Which of the Following Journal Entries Correctly Records Paying for a $900