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natalie Ketelhut
on Nov 12, 2024

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At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

Prepaid Insurance

An asset account that reflects the amount paid for insurance policies in advance, before the coverage period.

Insurance Expense

This refers to the costs incurred by a business or individual as a result of purchasing insurance to protect against risks.

Unexpired Insurance

The portion of an insurance premium that has not yet expired or been used and is considered a prepaid expense.

  • Distinguish and elucidate the diverse kinds of adjustments, such as accruals and deferrals.
  • Demonstrate how adjusting entries play a part in altering financial statement accounts.
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Carsyn BoyumNov 17, 2024
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