Debit and Credit are two fundamental concepts in accounting. Debit refers to an entry made on the left-hand side of an account, while credit means an entry made on the right-hand side of an account.

Debiting an account means increasing the balance of the account, while crediting an account means decreasing the balance of the account.

In the given options, the correct answer is option 'C,' which is Prepaid Insurance Premium. Let's understand why.

Prepaid Insurance Premium

Prepaid insurance premium refers to the money paid by a company to an insurance company for future coverage. It is an asset account and represents the amount of money paid in advance for insurance coverage that has not yet been used.

When a company pays for insurance premiums in advance, it is recorded as a debit entry in the prepaid insurance account. The amount is debited because it increases the balance of the prepaid insurance account.

When the insurance coverage period starts, the company will then credit the prepaid insurance account and debit the insurance expense account. This is because the prepaid insurance amount has been used, and the company must recognize the expense in the current accounting period.

Conclusion

In conclusion, the correct option out of the given accounts that is debited is Prepaid Insurance Premium. It is debited because it is an asset account, and when the company pays for insurance premiums in advance, it increases the balance of the prepaid insurance account.