Here is an interesting question for accounting purists… Ireceive an invoice on Dec 1st for my…

Here is an interesting question for accounting purists… Ireceive an invoice on Dec 1st for my insurance premium covering thenext year. As habit, I code my insurance bill to prepaid expenseand pass it on to the payables clerk to into the accounting system.The clerk posts the entry to prepaid and accounts payable. As theaccountant, I record the addition to prepaid expense so that I canamortize the appropriate amount of expense each month next year.The company controller who is in charge of releasing payments holdsoff on remittance due to cash flow issues – and fails to pay thebill until February. Oops! So… is the invoice date for a futureperiod of coverage the most important part of what makes a bill aprepaid expense? Or is the actual remittance of funds that makes itprepaid? How should we address and correctly post this invoice?