what-type-of-account-is-prepaid-insurance-a-stockholders-equity-b-expense-c-liability-d-asset

Question

What type of account is prepaid insurance?
A. Stockholders’ Equity
B. Expense
C. Liability
D. Asset

Puneet Prajapati · Accepted Answer

Okay, so let&#x27;s understand. What is the meaning of prepared insurance? Masterful. Do you feel like a dignitary definition? Not a technical definition, but are relatively easy detonation to make it work. It is Justin in Children&#x27;s expense here for next year, which is conceded as an insect for the company. Okay, so first of all, we will We will highlight some important important domes. Your definition insurance expense on next year Considered as an asset. Okay, so let&#x27;s draw the example to make the example moved here to suppose we have except by company. And here we have insurance company. I think everyone will be from live with danger and something like insurance. What does what does the insurance company do? The insurance won&#x27;t be received premium from from the persons on the ensure the evens are the insure the amount that they will likely that they would like you to pay. So the person from whom they received premium NGS off any type off disaster leaving. Let&#x27;s suppose I I pay a premium of $1000 to insurance company every year. Okay. In case I met with an accident. So whatever the amount of expense will my treatment be going to take vengeance on me. We&#x27;re going to be. We&#x27;ll be going toe there. Did it. Okay, That&#x27;s what the engines complete us. No. Let&#x27;s draw our main transaction evenings, X company. Hey, Sabrina. $2000. Please write down the example. So what? Dex completed a company paid Bring him off top $2000 to insurance company. Okay, $1000 per year. So x company realized the mistake after paying the expense off $2000. You know what happens? Out of $2000 $1000 will be treated as got India expense. Okay, it is very, very obvious that Trojan to record our toe, calculate the property loss for the current year. We will recognize the expense which will be the living 40 currently. Only okay, not for the future. Years are past years only for the Air India and out, off and out of the $2000 expense spared Did $1000 will be considered as repair insurance repaired insurance as the name suggests, the insurance which has been beard. But I do that period for which it is that they&#x27;re living. Okay, let&#x27;s suppose the current theories. 2000 bees 2022. 2020 vine. Okay, just I&#x27;m taking in his example to make it relatively easy. However, this prepared insurance will do to us. 23,022. Okay, so this $1000 will be considered as an asset for this Peter only but vendor, vendor entity and doesn&#x27;t do this financial year. This one in Julia. Then this $1000 will be pictured US current expense off that Peter. Okay, so we haven&#x27;t just ruined this whole story. Well, story off the prepaid insurance. So the correct choice. As for the given problem, And as for the given solution, we have arrived. The correct choice from Problem 34 is be okay. Because paper insurance are considered as a sex for the current period. And for the next period, for which they are 11 they will be treated us cutting expense. And then next, Peter. Okay. Thank you for the Thank you for your time.

Puneet Prajapati · Answer

Okay, So let&#x27;s understand. What is the meaning off set has given another question right now. So first of what, we will go with the literal definition or we can sit traditional definition which has been given in the books and followed by that. We will give an example to understand more clearly what is the meaning off. So let&#x27;s even understand the current definition with a more elaborated example is it is very thought financial drawbridge because Vivian, because without financial transaction, they will not be any, you know, any type of financial obligations arising out any of the parties. So that is right. There needs to be a financial transaction to create it. Obligation festival. Okay, so first of all, let&#x27;s understand that the basic the basic off, basic definition off said it is an amount which an individual are a company or any type of legal person. So, you know, individual like a human being or any type of sole provider which is dealing in tow, any type of business. Okay, on a company like a legally incorporated company. As for the local regulations off, the idiot or any type of legal person know what does the legal person. Pete. A legal person could be any type off. Oh, a sub sub ordinated off the company like he can have partnership forms. We can have limited liability partnership forms. We can have any type of authority that that will be or that has been created. Patty government. Okay, so that type of legal person like municipality and many of them, please. So assistant authority, which expects to receive from now, expect to receive what I&#x27;m out. So so what In tow? State that. But you can assume like this expects to receive amount from any other person as a desert off financial transaction. Let&#x27;s understand this. It molded into in itself. Because with example, you get a better clarity. More elaborated. Meaning, Lottie Basic traditional definition. So Mr A has sold What? Just that he has. Don&#x27;t few batches off students in dominant off Generally. Thank you. Oh, fee. So, Donna, 15 100 don&#x27;t What? In total means total fees are 1500 for all the students. For all the matches off, all this one&#x27;s in duty. But as of now, hasn&#x27;t r B made otherwise? We stood a on treatment off such ease. No. What? No what we have just studied in our basic on begins it classic definition of a sick or be Esther deed that it is an amount which an individual are accompanying or any type of legal person expects to receive. Okay, you can remove it from here because actually, we have stated it here. More people in the first place so expects to deceive from any other person from any other person as a dessert, all financial transactions. So there are four things more clearly wants to follow this one on this whole world. Then any other person, it maybe anything, Any other person, okay. And 40 minutes desertified. Roderick. And the baby needs to be a financial transaction executed before creation of such obligations. So in the current case, Mr has start some off the swings in the month of January and have heard fees off $1500 for all of the stories in total. So we have to advise that what What type of treatment has to be done by Mr for treating such amount? No. As for the definition, it can be clearly seen that the $1500 will be treated as in a sect. Bye. Mr E. Because off financial transition. Now, what is the meaning of financial transaction? We do not need to get confused in the names suggest they&#x27;re fun. And Children, which manages that means just that it involves supplying a good just obviously, is any type of goods or services underdone for receiving cash for receiving money from another person who is receiving the goods off service is okay. But when we are exchanging off goods or services, this will not involve anything or this will not be included in financial transaction. Okay, my Mr Eight. Because off when Children are virgin? No. Between whom? The financial transaction is being executed. Mr A. Huh? Students, Because students are receiving goods and services and mystery is expecting to receive fees from the students. So that is why it isn&#x27;t a set for Mr So for the current problem. Current problem. 15. We have I got a choice. So we have in the current problem in the current problem. 15. The correct choice is the correct choice. Is the so I problem? 15 by variety. Because it has been there. Dennis, he&#x27;s all right. Their distance e Mr E is expecting will deceive the please. So therefore the correct choices be for the control 50. That&#x27;s all for the solution. Thank you.

Puneet Prajapati · Answer

Okay, so let&#x27;s understand the meaning off liability. So we will first begin act the classic definition of liability and then be moved within Excel. So just in the mode, which is paper Bye. Which is? People by and individual, all dumped me or any die? Oh, legal person. Any of the person arising out off any table? One engine financial transaction? No. As for the classic definition feeble. First of all, read this. In the end, it is an amount which is people by an individual or company or any type of legal person. First of four. Let&#x27;s highlight most important items in the definition absent amount, vicious people by any individual company or any type off legal person. Okay, who? Any of the person arising out of any type of financial managers? So we will join example You&#x27;re a mogul and idea about what is the actual meaning of liability. Okay, But first of all, I let this time so that you can understand that. What other typical difficult elements off a definition. Okay, now let&#x27;s begin with an example. Hazel. Mr. D Mr Be has bar some some material from their suppliers. 12 daughter 1000 in the month off generally. But as of now, such amount has not been big. Their device, Mr B on treatment off such a moment now, Another current example Mr. P has worked Some material from their supplies were $2000 in the month of gender. But as of now, such a such amount has not being being so. Mr B needs an advice that have what type of treatment will be given to such type. Now, when we build different other definition which we have just written in the beginning, we even understand that it is just the amount of people by any type of person put any other person which is arising out of any type of financial transaction. So in our example, this is the old financial transaction because Mr P, as of applying, has bought some material which actually worth beat the $1000. Okay, so this is a financial transaction on Mr B is likely Doobie. This is their suppliers. So this is a liability, actually a liability. So therefore we can also we can also classify It does answer $1000 celebrity. But as of now, I would like to tell I would like to indicate that library could have many rapes, but I don&#x27;t know. The current type of liability is known as accounts. People are in traditional dorms. We also know account we used to know account stable, lass. Good. It does so for the ribs. For the solution for the current problem. The correct choice it is be goes, baby. Okay, so this is what we have for the current problem. Well, that&#x27;s all for the solution also. Thank you.

Puneet Prajapati · Answer

Okay, so let&#x27;s understand the current situation. So throughout the subject, who are the accounting as a subject? We have five type of accounts. Okay, I&#x27;m going toe. I don&#x27;t straightforward that cowboy types of accounts we have. Okay, A sect liabilities we can see. Oh, this. Okay, so, polarities living you Revenue and capital. Okay, so for a sect, the items such as cash balance at the end of the lemon, the amount recoverable from the customers after we have sold seven items to customers so that tomorrow will be considered as a sex. Okay, expenses. I guess everyone will leave a little family with that expenses. Like we haven&#x27;t got telephone expenses. Father. Business can be havin card. Bring general Station the expenses for the business so back will be considered as expenses. However, in case off second line, we have liabilities. So libraries are in contrast to assets. It means that support. Let&#x27;s we have We have purchased some of the material from our supplier, but we have not been done yet, so the amount becomes people after a certain period of time. So Dr Martin will be known as liabilities. They live in you. Let&#x27;s suppose you wearing business off selling something just because any type of Put yourself Mrs. So whenever you will sell those goods and services to anyone Julian Brady revenue That is also no less say&#x27;s what sales is. A little technical dough. But for sake of understanding the five types of the comes, we should consider the Ravens on the revenue. Okay, Capital is used for extradition covered in differentiate capital. However, these two we will understand it later parts Whenever we will face such accounting problems, However, you can know as off them like finance raising. Fine. We will regard every finances in production into the capital comes okay. No, a second expenses. Well, generally have a typical Ellis. You can write it down in your notebook, sergeant. Okay, so they&#x27;re going to be easy for you to make me. So make it to make it to revise it. Market and live in the seven capital will generally have a credit pellets. Okay, No aspect that given portion. Or if we have so it&#x27;s a sect of account is the same type off normal balance. So, Asper Averell illnesses the correct choice. The correct choice for problem problem 36 is the so that&#x27;s all for the garlic and solution. Thank you

Puneet Prajapati · Answer

Okay, so let&#x27;s understand the solution. Cluster for Louisville. Begin with the five type of accounts that that will be applicable throughout the country. OK, first is sex. Okay? The outside you covered up in the mountains. Let&#x27;s suppose you have a business and you have sold some water service is who? Your customers but the customers saying right now that he will be paying optimists are depleted of time that just around 30 days, so that tomorrow become automatically recovery. But okay, after that officer computer to think so that tomorrow will be being ordered in sex. Okay, gash in bank balance, if you will receive that amount from your customer so that so you will be mandating that cash balance at your entity in your cash drawer or any night off locker. Okay, So that will also become a sense in Henry. However, in traditional dance, we usedto dumb or we usedto no supplies, as in Bentley and then in inventory is nothing but the material you have purchased from you supplier for further processing off for further processing into finished goods so that you can so sold. You can sell those finished words too. Justin. Okay, let&#x27;s go to liabilities. Lively desired. Mostly in contrast, off six he belonged. So just we have This doesn&#x27;t bring three, like supposed You are purchased some inventory from your supplier, but you have not cared for them so that tomorrow becomes people. Okay, if that amount becomes people, so fact is considered as your liability, you have to pay off that liability after a certain period of time. Okay. Short and long term that that you like, or you take a loan from the bank to finance your different type of needs off the ones based on. You know, let&#x27;s example off chasing house, which isn&#x27;t properly purchasing car, motorbike or any night off needs you on. Okay, Shark and long term loans then come to capital. But on Capitol cookies, your capital, we will discuss in more detail when we will face much advanced problem later. Tow this. Do you see you contract your downfall form of BSC provincial capital in your lord books so that it would be easy or you devised these toes just before the accepts. Okay, so the capital is a dull which we use duty, Bardi Transactions allergic to financing for the business. Okay, no data expenses, okay? And I think everyone, everyone will be familiar with the expenses. So OK, the expenses which are incurred to one the profit on which which are incurred who relieved business but no personal nature are no personal expenses are allowed, Like you cannot say that you are going to consider personal expenses in your profit and loss and profit and loss statement off the business. Okay, so that should not be the case. No revenue if you are into If you&#x27;re in the business of selling or just ugly sister someone else to your customer. Okay. In most of the cases, so you&#x27;re Belgian. Date your revenue through selling the goods and services to your customer either through care Sailor Day Brazil like receiving the amount after later point in time. So that will become your sets. You can also have other angle. Okay, so these are the five type of accounts against which sorry against which I have stated the terms very, very relevant to them as off now for, you know, driving the solution for the current problem. However, I would also like to see what I would order so like to introduce some different companies. Five day difficulties. First of all, no. Let&#x27;s talk about the balances that how the how the different type of accounts have balances in most of the cases. Okay, so a certain expenses generally very, very generally means in most of the guests. In 99% of the cases, 99% of the cases will be will be having never evidences you will get to know a lot for this to me. What is the actual meaning off their Rebalances? While we will be moving to advance problems because of the unless another ways, it will not be much clearer to you, but as a matter off you the basis for the current solution, you can remember this. This is very, very simple. Nothing. Nothing toe, You know, very large it revenue capital, liabilities. Well, generally have credit balances, is that thank you. So what does that mean? Portions is which of the falling accounts will ever never dependence. Okay, So as we have just understood that the supplies order invent tree will be considered as an insect. Hey. Okay, so So we have we also know what is the meaning of in victory? No confirm Asper These rules, the asset will have generally or debit balance. So no, we can begin. Dr Other solution based on the analysis are based on the material we have. Just George it down. Okay, The correct choice for problem 33 is see? Okay, so that&#x27;s all for the solution. Please make sure that you will, Right? You will ride on your job. Your job down in your notebook for sheet as well as this as well as the second sheet. Third ship is not It&#x27;s not needed. Believe I don&#x27;t. Okay, I&#x27;m asking you to write down the first interrogation because that in most of the cases, whenever you will have exam so before 5 to 10 10 days back before that you need to them. You need to devise all this. That&#x27;s all for the solution. Thank you.

Puneet Prajapati · Answer

Okay. So via going to understand, different types also come That would be applicable. Who? Accounting we can say to hold off accounting as a subject. So there is your local, Okay? There is a personal account. Dave is a normal medical now. What happens? So instead of writing the technical divination for each of these, I&#x27;m going to write the example because accounting is a practical subject. Okay, So sort of yell account is we can see example really cold. We used mostly for engine ballistics. Okay, Specifications. So for machinery, when we will purchase the machinery or the business part and still opened in machine code. Okay, then it will open. There&#x27;s a code that was used for the constancy, but okay. And there are many assets which we create by being the expense in advance. Okay, like whenever we pay. But there it&#x27;s a supposed V day. The pair rent on people basis like we have paid rent off next financially in Indy. Got in finding trivia, so this will be considered us. This will be considered as the yellow card. Okay, So to account for the election in respect of people, repaired drink, reveal open tentacle okay, in case off Percents de ville. So for personal, Kofi generally opened these type of bulbs in name of person Like, let&#x27;s suppose there is a business or Mr X. So whenever x, whenever Mr X invest his money in business and withdraws the money from the business. So Louisville open, Mr. Except Okay, who account for the transaction in case off, Mr. However in case off, normally vehicle, it is a These are goats are over. Temporary in nature. Like these, Like one year. Okay, you can write, you know, There it is mostly created for one year and within paneer. These are transferred to these air concert transfer twosome. Better comes to show the okay. No So pretty bad rain videos for the codes. So, as in case off our current question also, it matches it. Joyce, be okay. What about the insurance? Is the expense bay to insure the loss arising from unexpected even. And when we will pay that expense for subsequent financial year in the current financial year then and I said will be created and account the religions for such a sex. They will open the real accounts. Okay. In name off. Three Pritchard. It&#x27;s so that despite matches with the choice be repaired insurance. And that&#x27;s all for absolution. However, you can write down this sheik number one on your notebooks for future reference, but that solution will be choice. Be okay.

Problem

Unearned service revenue occurs when which of the…

Problem 34 Hard Difficulty

What type of account is prepaid insurance?
A. Stockholders’ Equity
B. Expense
C. Liability
D. Asset

Answer

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Mitchell Franklin, Patty Graybeal, Dixon Cooper

Principles of Accounting Volume 1: Financial Accounting

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Principles of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon CooperPrinciples of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon Cooper

Principles of Accounting Volume 1: Financial Accounting