Prepaid Insurance Debit Or Credit
How To Debit And Credit Prepaid Insurance And The Adjusting Entry Another possibility is that the company simply failed to pay the insurance company and the monthly adjusting entries caused the balance in prepaid insurance to become a credit balance. whatever the cause of the credit balance in prepaid insurance, the account balance needs to be adjusted before issuing a balance sheet. the prepaid insurance account must report the true amount that is prepaid (paid but not yet expired) as of the date of the balance sheet. if nothing is prepaid then the prepaid insurance account must show a zero balance. if an amount is owed to the insurance company, there should be a liability account with a credit balance for the amount owed as of the balance sheet date. The About Com Story The initial journal entry for prepaid rent is a debit to prepaid rent and a prepaid insurance debit or credit credit to cash. these are both asset accounts and do not increase or decrease a company’s balance s...