Asked by Chiamaka Emerenini on Jul 22, 2024
Verified
Prepaid insurance is reported on the balance sheet as a
A) current asset
B) fixed asset
C) current liability
D) long-term liability
Prepaid Insurance
An asset account that represents insurance premiums paid in advance, which are expensed over the period the insurance coverage relates to.
Current Asset
Asset expected to be converted into cash, sold, or consumed within a year or within the business's operating cycle.
- Attain expertise in the identification and presentation of assets and liabilities within financial reports.
Verified Answer
MW
MacKenzie WhiteJul 26, 2024
Final Answer :
A
Explanation :
Prepaid insurance represents an advance payment made by the company for future insurance coverage. As the coverage period decreases, the amount of prepaid insurance decreases as well. Therefore, it is classified as a current asset on the balance sheet.
Learning Objectives
- Attain expertise in the identification and presentation of assets and liabilities within financial reports.
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