Before an Adjusting Entry Is Made to Recognize the Cost

question 43

True/False

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

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Definitions:

Deductible

A cost that can be deducted from total income to lower the taxable income amount.

Charitable Contribution Deduction

A tax deduction that allows taxpayers to deduct donations made to qualifying charitable organizations from their taxable income.

Itemize Deductions

To list allowable expenses that can be subtracted from adjusted gross income to reduce taxable income, rather than taking a standard deduction.

Taxpayers

Individuals or entities that are required to pay taxes to a federal, state, or local government.