The entry to close the appropriate insurance account at the end of the accounting period is to debit:

A) Income Summary; credit Prepaid Insurance.

B) Prepaid Insurance; credit Income Summary.

C) Income Summary; credit Insurance Expense.

D) Insurance Expense; credit Income Summary.

Question

Business

Cristina Sparks

22 June, 19:46

The entry to close the appropriate insurance account at the end of the accounting period is to debit:

A) Income Summary; credit Prepaid Insurance.

B) Prepaid Insurance; credit Income Summary.

C) Income Summary; credit Insurance Expense.

D) Insurance Expense; credit Income Summary.

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Answers (1)

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Beau Arellano · Answer 1

C) Income Summary; credit Insurance Expense.

Explanation:

In accrual accounting a business must recognise expenses as they are incurred and then they are adjusted into the relevant revenue or expense account.

At the end of the accounting period any accrued revenue or expense is moved to the relevant income or expense account.

In this case we debit income summary and credit insurance expense to close insurance account.

The entry to close the appropriate insurance account at the end of the accounting period is to debit:A) Income Summary; credit Prepaid Insurance.B) Prepaid Insurance; credit Income Summary.C) Income Summary; credit Insurance Expense.D) Insurance Expense; credit Income Summary.

The entry to close the appropriate insurance account at the end of the accounting period is to debit:

A) Income Summary; credit Prepaid Insurance.

B) Prepaid Insurance; credit Income Summary.

C) Income Summary; credit Insurance Expense.

D) Insurance Expense; credit Income Summary.