 the same concept is here for any kind of prepayment and insurance is the biggest is the most common example because insurance by definition is something you paid for before you did they gave you anything right you didn't get the coverage you can't get the coverage and then pay for the insurance you have to pay for the insurance before giving the coverage now if you pay for insurance every month then if you just expense it monthly you're pretty close and that's probably not a problem but if you pay for a whole year's worth of insurance up front which is often cheaper and so therefore many people do it then you're going to have the same issue where you have this big the insurance expense say in january if you paid for it in january versus february and therefore the typical method from an accrual standpoint is like with the furniture and equipment you put it on the books as an asset and then you've got to determine how much of it you have consumed over the life thus far as of the cutoff date and make an adjusting entry this time not making a contra asset account as is done with fixed assets but just writing down the insurance account directly so so we'll dive into that in more detail you could do a prepaid insurance for any kind of expense account if you prepaid it but there's certain type of expense accounts you're more likely to do that with