12 BULLETIN 865, U. S. DEPARTMENT OF AGRICULTURE. 
D. PREPAID EXPENSE. 
Prepaip INSURANCE (D 1). 
DEBIT: 
1. With the total amount of fire insur- 
ance premiums prepaid as shown 
by the Balance Sheet at the time 
of opening the books. 
2. With the amount of fire insurance 
premiums paid. 
CREDIT: : 
1. At the close of the period with the 
portion of fire insurance premiums 
expired. 
2. With the returned premium when 
any policy is canceled. 
Usually policies run for a year and are paid forinadvance. This payment is charged 
to the Prepaid Insurance account and represents an asset value. 
The amount is re- 
duced periodically by a charge to Insurance Expense, the credit being carried to the 
Prepaid Insurance account. 
Pr PRINTING AND STATIONERY (D 2). 
DEBIT: 
1, With the estimated value of the stock. 
on hand as shown by the Balance 
Sheet at the time of opening the 
books, 
2. With the cost of all purchases during 
the period. 
CREDIT: 
1. At the close of the period with the 
estimated value of the amount 
used during the period. 
2. With any amount disposed of other- 
wise. 
It is advisable to carry a Printing and Stationery account, inasmuch as such supplies 
will be purchased in quantities sufficient to cover several months’ usage. Prorating 
the expense over the period during which it will be used is preferable to burdening the 
month in which the purchase is made with the entire cost and thus possibly affecting 
the profits for the period. In this case Printing and Stationery Inventory account will 
be credited with the value of the amount used, the corresponding debit being carried 
to Office Supplies. 
LIABILITIES, RESERVES, AND NET WORTH. 
F. CURRENT LIABILITIES. 
Notes PayasBte (F 1). 
CREDIT: 
1. With the face value of all signed ob- 
ligations of the organization as 
Deni: 
1. With the amounts paid in partial or 
entire settlement of signed obli- 
_ gations. shown by the Balance Sheet at the 
2. With signed obligations given in re- time of opening books. 
newal. 2. With the face value of any obliga- 
tions subsequently issued. 
Should a note be renewed, thus in effect giving a new note for the old note, debit this 
account for the face value of the old note, and credit the account with the amount of 
the new note. 
A careful record should be maintained of all notes given, showing date issued, to 
whom, date of maturity, and rate of interest. 
