A County Uses the Consumption Method in Accounting for Insurance

question 9

Multiple Choice

A county uses the consumption method in accounting for insurance premium prepayments. At the beginning of the fiscal year, the county paid a $24,000 insurance premium to cover the current year and the subsequent fiscal year. At the end of the current year, the county will report in its General Fund

• A) Expenditures of $24,000.
• B) Expenditures of $12,000 and a $12,000 prepaid asset.
• C) A $24,000 prepaid asset.
• D) Other financing use of $24,000.

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Definitions:

System-1 Human Response

The fast, automatic, and often subconscious way of thinking as described in dual-process theories of cognition.

Intentions

Plans or aims that guide one's actions, reflecting what individuals intend to do.