Under the Alternative Method for Recording Prepaid Expenses,which Is the Correct

question 365

Multiple Choice

Under the alternative method for recording prepaid expenses,which is the correct set of journal entries?

• A) \(\begin{array}{|l|l|}
• \hline{\text { Initial Entry }} & {\text { Adjusting Entry }} \\
• \hline \text { Insurance Expense } & \text { Prepaid Insurance } \\
• \hline \text { Cash } & \text { Insurance Expense } \\
• \hline
• \end{array}\)
• B) \(\begin{array}{|l|l|}
• \hline{\text { Initial Entry }} & {\text { Adjusting Entry }} \\
• \hline \text { Cash } & \text { Prepaid Insurance } \\
• \hline \text { Insurance Expense } & \text { Insurance Expense } \\
• \hline
• \end{array}\)
• C) \(\begin{array}{|l|l|}
• \hline {\text { Initial Entry }} & {\text { Adjusting Entry }} \\
• \hline \text { Prepaid Insurance } & \text { Prepaid Insurance } \\
• \hline \text { Cash } & \text { Insurance Expense } \\
• \hline
• \end{array}\)
• D) \(\begin{array}{|l|l|}
• \hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\
• \hline \text { Prepaid Insurance } & \text { Insurance Expense } \\
• \hline \text { Cash } & \text { Prepaid Insurance } \\
• \hline
• \end{array}\)
• E) \(\begin{array}{|l|l|}
• \hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\
• \hline \text { Prepaid Insurance } & \text { Cash } \\
• \hline \text { Insurance Expense } & \text { Prepaid Insurance } \\
• \hline
• \end{array}\)

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Definitions:

Total Costs

The total of variable and fixed expenses associated with the creation of goods or services.

Wage Rates

Refers to the fixed amount of compensation paid to employees for their labor, typically expressed per hour, day, or piece produced.

Labor Demand

This represents the total amount of workers that employers are willing and able to hire at a given wage rate in a given time period.

Unit Elastic

Describes a demand or supply that changes by an identical percentage as the price changes.