Adjusting Entries for Prepayments Record the Portion of the Prepayment

question 33

True/False

Adjusting entries for prepayments record the portion of the prepayment that represents the expense incurred or the revenue earned in the current accounting period.

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Definitions:

Endowment Policy

An endowment policy is a life insurance contract designed to pay a lump sum after a specific term (on its 'maturity') or on death.

Maximum Loan

The highest amount of money that a borrower can obtain from a lender under a specific loan agreement.

Insured

A person or entity covered under an insurance policy receiving protection against specified risks.

Loan Available

The amount of money that a lender is willing to provide to a borrower under agreed conditions.