Prepaid insurance is the part of insurance which is already paid but the time period for use is not expired till the date of balance sheet. It is a part of current asset which has not been used. Thus it is written on the asset side of balance sheet until it is utilised.
Is prepaid insurance a debit or credit in trial balance?
Are Prepaid Expenses Debits or Credits? When there is a payment that represents a prepayment of an expense, a prepaid account, such as Prepaid Insurance, is debited and the cash account is credited. This records the prepayment as an asset on the company's balance sheet.
Is prepaid expense on the trial balance?
Prepaid expenses are not recorded on an income statement initially. Instead, prepaid expenses are first recorded on the balance sheet; then, as the benefit of the prepaid expense is realized, or as the expense is incurred, it is recognized on the income statement.
What account does prepaid insurance go under?
Prepaid insurance is recorded in the general ledger as a prepaid asset under current assets.
Where is prepaid insurance shown?
Prepaid Insurance is part of current assets and to be shown in the balance sheet.