Q/15

A business decides to get liability insurance, which will cost them $5,000 annually. The insurance will be purchased on November 1, 2021, and the business will pay for the liability insurance in full. Which statement best describes what will happen on November 1, 2021, as a result of this purchase?

a. The account cash will decrease

b. The asset prepaid insurance will decrease

c. The liability insurance will be recorded as an expense

d. Nothing; the business has not yet used any of the insurance