Prepaid Insurance is an example of a current asset.

Prepaid Insurance

An asset account representing insurance payments made in advance for future coverage periods, recognizing expense over the coverage term.

Current Asset

An asset likely to be converted into cash within a year, used in the normal operations of a business.

Highlight the differentiation of current assets, plant assets, and liabilities as noted in the balance sheet.

Verified Answer

Final Answer :

True

Explanation :

Prepaid Insurance is a current asset because it is an expense that has already been paid in advance and will be used up within a year.

Learning Objectives

Highlight the differentiation of current assets, plant assets, and liabilities as noted in the balance sheet.