Prepaid insurance is nothing like expense book of next finacial to current finacial.
If ur insurance period is 1-1-2017 to 31-12-2017
upto 31-3-2017 expense book as insurance expense and for 1-4-2017 to 31-12-2017 record as a prepaid expense.
calculation will be like this:
insurance expense= Rs.10000*90 days/365 days=Rs. 2465
and left amt. record as prepaid expense Rs.7534
entry will be:
Insurance expense A/c Dr. 2465
Prepaid insurance exp. A/c Dr. 7534
to party A/c. 10000
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