Before an Adjusting Entry Is Made to Recognize the Cost

question 43

True/False

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

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Definitions:

Debit And Credit

A fundamental concept in accounting that describes the two sides of every financial transaction; debits increase assets or decrease liabilities, while credits decrease assets or increase liabilities.

Dr. And Cr.

Abbreviations for Debit (Dr.) and Credit (Cr.), fundamental concepts in accounting used to record business transactions in the ledger.

Increase And Decrease

Refers to the upward or downward movement in financial metrics, operational quantities, or statistical values.

Balance Of An Account

The amount of money currently in an account, reflecting all credits and debits made.