Vehicle Insurance Premiums

[Gregory Forster]

You're making an extra needless step for yourself. However, to answer 
your question, when you credit the insurance liability, you debit 
insurance expense.  When you actually pay the liability, you debit the 
liability and credit your cash account, much  like account payable in  
an accrual accounting system.  However, other than large corporations, 
I've never seen a strict accrual accounting system used.  They've always 
been either a straight cash or hybrid accounting system.  WHat I do, is 
hwne I get the bill and pay it, I credit my cash account and debit 
expense.  Hope that helps.

Greg

On 9/9/2014 3:45 PM, William Storey II wrote:
> I know that prepaid insurance is an asset that you would amortize.  However how do you account for vehicle insurance that you do not prepay. I know I could just create the expense each month. But shouldn't I be putting the whole balance in like a short term liability and then expensing it each month?  The problem is if I credit liability I have no clue what to debit?
>
> Thanks!
>
> Sent from my iPhone
>
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