The entry to close the appropriate insurance account at the end of the accounting period is:
a. debit, Income Summary; credit Prepaid Insurance
b. debit, Prepaid Insurance;credit Income Summary
c. debit, Insurance Expense; credit Income Summary
d. debit, Income Summary; credit Insurance Expense
Sandy
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The entry to close the appropriate insurance account at the end of the accounting period is:
d. debit, Income Summary; credit Insurance Expense.
Insurance expense acct is a normal debit balance. To close it, you need to credit it.
Anna
c.
You must determine the insurance that has expired (Debit Insurance Expense) and reduce income (Credit income summary) by the same amount.
This way you will have properly assigned expenses to the proper accounting cycle.