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Yes. Unexpired insurance, or prepaid insurance, represents value to the business since it has utility and is owned by the business (the company has claim to the policy). Therefore by definition, unexpired insurance is an asset.
Unexpired insurance at the end of fiscal year is that amount of insurance paid in advance but part of which is not consumed during fiscal year.
Debit.
Unexpired expense is current assets until used so it is part of assets of business and should be included in assets side of balance sheet.
debit insurance expense 10000 credit prepaid insurance 10000
Yes. Unexpired insurance, or prepaid insurance, represents value to the business since it has utility and is owned by the business (the company has claim to the policy). Therefore by definition, unexpired insurance is an asset.
Unexpired insurance at the end of fiscal year is that amount of insurance paid in advance but part of which is not consumed during fiscal year.
Debit.
Unexpired expense is current assets until used so it is part of assets of business and should be included in assets side of balance sheet.
debit insurance expense 10000 credit prepaid insurance 10000
those expenses which have been paid in advance and whose benefit will be available in future are called unexpired or prepaid expenses. e.g. insurance premium
In case of some expense u might have seen advance payment is done. So as to comply with the terms of agreement or it can befor any other reason too.And this advance is shown in the asset side of balance sheet.Now,in case of insurance the same thing is happening.For example:- a ltd. F.y begins from 1-4-10 to 31-3-11. A ltd. Purchases a fixed asset on 1-2-11. Now a ltd. Wants to get this fixed asset insured and minimum insurance period as per the insurance policy is 1 year. So here the insurance period willbegin from 1-2-11 to 28-2-12.As per accrual basis of accounting expenses which pretain to a particular year are are to be shown in the p/l of that year. And rest are shown as prepaid expense (in case of insurance termed as , unexpired insurance)now coming back to a ltd. Let us suppose that payment made is = rs. 12000.Calculation of expired and unexpired expense.Total insurance expense paid = 12000insurance expense of single = 12000/12monthexpired insurance = 1000*2 (for the month of feb and march 2011)and rest of the amount is unexpired insurance because the period to which it pertains is of next f.y. Hence in the b/s of 10-11 insurance amount of rs 10000 will be shown as unexpired insurance.And yes one thing more. There is no such term as unexpired prepaid insurance. Either u call it prepaid insurance or unexpired insurance.Hope i solved ur query.
Prepaid insurance is amount paid in advance that's why it is an asset of business and like all other assets accounts it also has debit balance as normal balance.
deferred nexpense
Drawings account has a normal balance as a reverse of owners equity account which is debit balance as a normal balance.
It has no normal balance.
debit unexpired rentcredit prepaid rent