Multiple choice

Prepaid Insurance paid for the current year is

  1. an asset

  2. a liability

  3. an expense

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 It is an asset since it is paid in advance for the next year. It is deducted from the total insurance paid in the debit side of Profit & Loss and shown in assets side of Balance Sheet.

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