Multiple Choice
On July 1, 2021, JazzE Ltd. purchased a 3-year insurance policy and paid a premium of $60,000. JazzE has a December 31 year end. Under accrual accounting, which of the following statements best describes the effect of this transaction?
A) The balance in the prepaid insurance account on December 31, 2022 will be $40,000.
B) The insurance expense account for the period ending December 31, 2022 will be $20,000.
C) The balance in the prepaid insurance account on December 31, 2022 will be $30,000.
D) The insurance expense account for the period ending December 31, 2022 will be $10,000.
E) The balance in the prepaid insurance account on December 31, 2022 will be $60,000.
Correct Answer:
Verified
Correct Answer:
Verified
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