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Prepaid Insurance account is a
  • a)
    Nominal account
  • b)
    Real account
  • c)
     Representative Personal account
  • d)
    Artificial Personal account
Correct answer is option 'C'. Can you explain this answer?

Answers

Representative Personal Accounts are accounts which represent a certain person or group of people. Accounts relating to outstanding and prepaid items are called representative personal accounts. For example, prepaid insurance, outstanding rent, outstanding wages/salaries etc.

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Prepaid Insurance account is aa)Nominal accountb)Real accountc)Representative Personal accountd)Artificial Personal accountCorrect answer is option 'C'. Can you explain this answer?
Prepaid expense is a personal account and is shown on asset side of balance sheet

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Prepaid insurance is a nominal account but it has a debit balance that's why it shown in balance sheet assets side

Prepaid Insurance account is aa)Nominal accountb)Real accountc)Representative Personal accountd)Artificial Personal accountCorrect answer is option 'C'. Can you explain this answer?
Prepaid insurance is the portion of an insurance premium that has been paid in advance and has not expired as the date of the balance sheet. It is an asset for organisation. Assets are real account.

Any prefix or suffix to nominal A/C should treat as personal nature ex: commison paid in advance

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Representative Personal Accounts are accounts which represent a certain person or group of people. Accounts relating to outstanding and prepaid items are called representative personal accounts. For example, prepaid insurance, outstanding rent, outstanding wages/salaries etc.