Bannister Inc

question 2

Multiple Choice

Bannister Inc.'s fiscal year ended on November 30, 2011. The accounts had not been adjusted for the fiscal year ending November 30, 2011. The balance in the prepaid insurance account as of November 30, 2011, was $35,200 (before adjustment at Nov. 30, 2011) and consisted of the following policies:

The adjusting entry required on November 30, 2011, would be

• A) Insurance Expense ................... 24,000 Prepaid Insurance ................. 24,000
• B) Insurance Expense ................... 9,600 Prepaid Insurance ................. 9,600
• C) Insurance Expense ................... 11,200 Prepaid Insurance ................. 11,200
• D) Insurance Expense ................... 16,400 Prepaid Insurance ................. 16,400

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Definitions:

Statement Of Financial Affairs

A detailed financial report prepared during bankruptcy proceedings, listing assets, liabilities, and creditors.

Assets And Liabilities

The financial rights or resources owned by a business (assets) and the obligations or debts it owes (liabilities).

Total Liabilities

The cumulative amount of all debts and obligations that a company owes to external parties or entities.

Priority

The status afforded to certain debts, making them more important or urgent to pay off compared to others in the context of liquidation or bankruptcy.