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No, insurance expense is not a liability but rather an operating expense. Expenses are listed on the Income statement and are taken out of gross income (revenue).
It is very doubtful you will ever see insurance of any type listed in the liability section of the balance sheet. Expenses are never listed as a liability but when creating a trial balance, post closing trial balance etc. Expenses are listed under the asset section. This is mainly due to the fact that expenses increase with a debit and decrease with a credit, similar to that of assets, however expenses are neither listed as an asset or liability but rather an operating expense.
The only time insurance is listed as an asset is when it is prepaid. Prepaid insurance (insurance paid in advance) is an asset account. For example, Company X pays $12,000 for a one year insurance policy on January 15th, the policy renews the 15th each month. The first recording of the transaction will be listed as;
Prepaid Insurance (dr) $12,000
Cash (cr) $12,000
After the initial posting adjusting entries will be made accordingly. On February 15th the company will adjust the previous entry;
Insurance Expense (dr) $1,000
Prepaid Insurance (cr) $1,000
January premium expired.
What else can I help you with?
Is account payable part of expense?
yes
Is salaries payable an expense?
Salaries payable is a out standing expenses for time being its show as a liability account.
ER pays 12 EE pays 12 insurance How do you book this in an journal entry?
Assuming the employee paid via payroll deduction, most companies would post the P/R deduction as a credit to Insurance Expense (or a credit to a contra-account called something like Employee's Contributions to Insurance Expense) directly from the payroll entry. However, you could also post the P/R deduction credit to a liability account called Employee Insurance Payable. Then, when the insurance invoice was posted, half would be debited to Insurance Expense and half to the liability account. This would give you more cost control if you reconciled the payable account with each invoice.
What is the journal entry to record an accrued exp?
debit: expense account credit: account payable (vendor)
Is notes payable a permanent account?
Any account on the balance sheet is a permanent account - 'Cash', 'Accounts Receivable', 'Accounts Payable'. Income and expense accounts are temporary accounts because they are closed at the end of an accounting period. Examples are: 'Service Revenue', 'Office Expense', and, my personal favourite, 'Meetings and Entertainment Expense'.
Is account payable part of expense?
yes
What is the journal entry to reverse an accrued expense?
Payable Account XXX Expense Account XXX
Is electricity a liability or asset?
Electricity expense is an expense account while accrued electricity payable is a liability account
Is accrued expense a financial liability?
If you are doing adjusting entries, an accrued expense will affect a balance sheet account (payable) and an income statement account (expense). Such as accrued interest at the end of year would be: Interest Expense (Debit) Interest Payable (Credit)
Is salaries payable an expense?
Salaries payable is a out standing expenses for time being its show as a liability account.
ER pays 12 EE pays 12 insurance How do you book this in an journal entry?
Assuming the employee paid via payroll deduction, most companies would post the P/R deduction as a credit to Insurance Expense (or a credit to a contra-account called something like Employee's Contributions to Insurance Expense) directly from the payroll entry. However, you could also post the P/R deduction credit to a liability account called Employee Insurance Payable. Then, when the insurance invoice was posted, half would be debited to Insurance Expense and half to the liability account. This would give you more cost control if you reconciled the payable account with each invoice.
What is the journal entry to record an accrued exp?
debit: expense account credit: account payable (vendor)
The entry to close the appropriate insurance account at the end of the accounting period is what?
Insurance account is expense account and expense account is closed in income summary account. Insurance account should be credited where as income summary account should be debited
Is notes payable a permanent account?
Any account on the balance sheet is a permanent account - 'Cash', 'Accounts Receivable', 'Accounts Payable'. Income and expense accounts are temporary accounts because they are closed at the end of an accounting period. Examples are: 'Service Revenue', 'Office Expense', and, my personal favourite, 'Meetings and Entertainment Expense'.
When you debit an operating expense what account do you debit?
In my opinion, this question is wrong. DR Operating Expense CR Accounts Payable
What type of account is insurance expense?
liability
Is prepaid insurance account a nominal account?
No, it is a real/permanent account. Insurance expense is a nominal account.
