Asked by Norma Ocampo on May 27, 2024
Verified
An example of an adjusting entry for a prepaid item using the QBO journal is:
A) Debit Credit Insurance Expense $1,000 Prepaid Insurance $1,000\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Insurance Expense } &\$ 1,000\\\text { Prepaid Insurance } & &\$ 1,000 & \\\end{array} Insurance Expense Prepaid Insurance Debit $1,000 Credit $1,000
B) Debit Credit Prepaid Insurance$1,000 Insurance Expense $1,000\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Prepaid Insurance} &\$ 1,000\\\text { Insurance Expense } & &\$ 1,000 & \\\end{array} Prepaid Insurance Insurance Expense Debit $1,000 Credit $1,000
C) Debit Credit Insurance Expense$1,000 Insurance Payable$1,000\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Insurance Expense} &\$ 1,000\\\text { Insurance Payable} & &\$ 1,000 & \\\end{array} Insurance Expense Insurance Payable Debit $1,000 Credit $1,000
D) Debit Credit Insurance Payable$1,000 Insurance Expense $1,000\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Insurance Payable} &\$ 1,000\\\text { Insurance Expense } & &\$ 1,000 & \\\end{array} Insurance Payable Insurance Expense Debit $1,000 Credit $1,000
Prepaid Item
An expense paid in advance and recorded as an asset until it is actually used or consumed.
Adjusting Entry
Financial records established at the conclusion of an accounting term to assign earnings and costs to the period they truly belong.
Insurance Expense
The cost incurred by a business or individual for purchasing insurance policies to protect against potential losses or liabilities.
- Acquire the knowledge necessary to execute adjusting entries for accrued and prepaid expenses within QuickBooks Online.
Verified Answer
DC
Dessy ChristinaMay 30, 2024
Final Answer :
A
Explanation :
Adjusting entries for prepaid items involve moving an amount from an asset account (Prepaid Insurance) to an expense account (Insurance Expense) to recognize the expense incurred over time. This reflects the consumption of the prepaid item.
Learning Objectives
- Acquire the knowledge necessary to execute adjusting entries for accrued and prepaid expenses within QuickBooks Online.