In Its 2013 Income Statement, WME Reported $58,000 for Insurance

Multiple Choice

In its 2013 income statement, WME reported $58,000 for insurance expense. WME paid $72,000 in insurance premiums during 2013. In its reconciliation schedule, WME should:

A) Show a $14,000 positive adjustment to net income under the indirect method for the increase in prepaid insurance.
B) Show a $14,000 negative adjustment to net income under the indirect method for the decrease in prepaid insurance.
C) Show a $14,000 negative adjustment to net income under the indirect method for the increase in prepaid insurance.
D) Show a $14,000 positive adjustment to net income under the indirect method for the decrease in prepaid insurance.