Multiple choice

Unexpired insurance belongs to which category of accounts?

  1. Real account

  2. Personal account

  3. Nominal account

  4. Suspense account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Unexpired insurance (prepaid insurance) represents a future benefit and is therefore classified as a personal account representing the insurance company (the person who will provide coverage). In traditional accounting classification, accounts representing future benefits payable/receivable from persons are treated as personal accounts. It is not a real account (asset) or nominal account (expense/income) in the traditional sense.

Keep practicing — related questions