Answer:
$300 is reported as a expense
Explanation:
and $900 is reported as an asset hope this helps you :) god loves you :)
Answer:
$300 as an expense, $900 as an asset
Explanation:
due to the accrual concept, we generate expenses in the same period revenue is recognized. So when you prepay on insurance (or anything), instead of the entire cost being considered an expense at the time of payment, a portion is considered an expense, while the remainder is an asset due to the probability of a sale.
Consider you, as an individual, prepay your 6 month car insurance premium, then 2 months later do some research and find it cheaper some where else. You would have had that 2 months as an expense, while the 4 months was an asset, because you will receive a refund.
It's considered an Asset because it's cash that can be returned at any given time.
