The unexpired insurance at the end of the fiscal period represents
a) an accrued asset
b) an accrued liability
c) an accrued expense
d) a deferred expense
The Correct Answer for the given question is option d) a deferred expense
The unexpired insurance at the end of the fiscal period represents a deferred expense. When an organization has insurance that is still effective and has not expired, the insurance is said to be unexpired. This means that the organization has not yet paid for the policy and it may still be in effect (at least as long as no claims are filed). In some cases, organizations may choose to renew their insurance even if it is currently unexpired, in order to guarantee coverage for future events. By carrying unexpired insurance, an organization can reduce its risk of financial liability associated with potential claims.
An expense that has already been incurred but has not yet been consumed is called a deferred expense. Costs are recorded as assets until the underlying goods and services are consumed; at that point, they become expenses.Expenses incurred in the past but not yet realized are deferred expenses. A prepaid payment is an advance payment for future consumption of a service. The cost is included on the balance sheet as an asset. It could be prepaid rent, prepaid insurance, etc. Since there is still unexpired insurance at the end that reflects the deferred expense.
Table of Contents
People Also Ask
Is unexpired insurance debited or credited?
Many business owners believe that expired insurance is automatically debited from their account. In reality, this is not always the case. When an insurance policy expires, it is no longer in effect and the premium paid for it cannot be refunded or credited to the account. Businesses that have insurance with a deferred expense feature may find that the cost of their coverage is credited to their account at the end of each billing cycle even if the policy has expired.
Is unexpired insurance an income?
According to the IRS, unexpired insurance is taxable income. The tax law defines “unexpired insurance” as any policy or contract of insurance that has not terminated. The valuable features of this type of coverage include the potential for an immediate payment in the event of a covered loss, as well as reimbursement for expenses incurred in connection with a covered loss.
On which side of balance sheet is unexpired insurance shown?
In accounting, insurance is usually expensed on the balance sheet when it is issued and paid. This is because insurance premiums are essentially payments made in advance for future benefits. An insurance policy with a long expiration date will generally be shown as an asset on the balance sheet, since the premiums have not yet been paid in full. Conversely, a policy with a short expiration date will generally be shown as a liability on the balance sheet, since the premiums have already been paid in full and there are no benefits left to pay.
Is unexpired and prepaid same?
Unexpired insurance and prepaid insurance are often confused with each other. However, they are actually two different things. Unexpired insurance is a form of insurance that has not been used yet. Prepaid insurance is an insurance policy that has been purchased in advance. Prepaid insurance is a type of insurance that can be purchased in advance of a need. Unexpired insurance is also a type of insurance, but it refers to the condition of an insurance policy after it has been issued and its duration has expired. There are some important differences between these two types of coverage.
An unexpired policy may have a shorter duration than an expired policy because the insurer may not have enough information about the individual or their history to issue a longer-term policy. Additionally, an unexpired policy may not cover as many conditions as an expired policy. For example, most homeowner’s policies cover home damage only up to $250,000 while an expired policy would likely include coverage for up to $500,000 in damages. Prepaid plans also offer certain benefits that are not available with expiring policies.
What type of account is unexpired interest?
An account that has not been used in over a year is considered “unexpired interest.” This type of account includes savings accounts, CDs, and money market accounts. This means that the money in these accounts is still available to be withdrawn, but the interest earned on it has already been paid out.
What are unexpired prepaid accounts?
Unexpired prepaid accounts are those that have not been used or accessed within a certain period of time. This can include both physical and virtual cards, as well as stored value products like gift cards. The purpose of this policy is to prevent consumers from cashing in on unused funds, which can lead to financial instability. Cards with a expiration date may be expired, but the funds inside them may still be usable.
What is unexpired product cost?
In business, there are a number of ways to measure the value of an item. One way to determine the cost of an item is to use its expiration date. Expired products have a cost associated with them because they no longer meet applicable quality standards or have been damaged beyond repair. The cost of expired products can vary greatly, depending on the product and its specifications. To calculate the cost of an unexpired product, one must take into account factors like quality, specification, and how much it would cost to replace in case it goes bad.
How do I record unexpired prepaid rent?
If you have prepaid rent that has not expired, there are a few ways to record it. You can either keep the receipt or write down the account number and expiration date. If you have a lease agreement, you can add this information to your copy of the agreement.