In December 2018, Kojak Insurance Co

Multiple Choice

In December 2018, Kojak Insurance Co. received $500,000 in premiums for a two-year property insurance policy. The company recorded the transaction by debiting cash and crediting insurance premium revenue for the full amount. An internal audit conducted in early 2019 flagged this transaction. The appropriate accounting treatment is that:

A) Kojak needs to correct an accounting error.
B) Kojak has made a change in accounting principle, requiring retrospective adjustment.
C) Kojak is required to adjust a change in accounting estimate prospectively.
D) Kojak is not required to make any accounting adjustments.