Answer:
the correct journal entry to be recorded when the prepaid insurance payment is realized is,
A) Debit Insurance Expense
Credit Prepaid Insurance
Explanation:
prepaid insurance is an asset to the company, which means that we have paid in advance. because of this, when we pay it in advance, the entry will be
"prepaid insurance debit
money/bank credit"
this asset was created because the payment we made for the insurance does not belong to this accounting time period and it belongs to the next accounting period. matching concept is the underlying concept behind this.
once we reach the next time period, the prepaid expense becomes a actual cost and the asset is decreased.
