A. Current Asset
B. Current Liability
C. Fixed Asset
D. Income
Prepaid insurance is the expense relating to the next accounting period but has been
paid in the current accounting period and hence it is a current asset. The adjustment would be to
deduct it from the respective expense account in the P&L A/c and show it as a current asset in the
Balance Sheet.
Correct Answer: Current Asset ✔
Last Updated: September 12, 2018