Questions: The adjusting entry to recognize the portion of prepaid insurance that was used during an accounting period includes a square to the prepaid insurance account and a square to the insurance expense account. (Enter either debit or credit in each blank)

The adjusting entry to recognize the portion of prepaid insurance that was used during an accounting period includes a credit to the prepaid insurance account and a debit to the insurance expense account.

Explanation:

• Prepaid Insurance Account: This is an asset account. When you initially pay for insurance in advance, it is recorded as a prepaid expense (an asset). As time passes and the insurance coverage is used, the value of this asset decreases. Therefore, you credit the prepaid insurance account to reduce its balance.

• Insurance Expense Account: This is an expense account. As the insurance coverage is used, it becomes an expense for the business. Therefore, you debit the insurance expense account to increase its balance, reflecting the cost incurred during the period.