9 When Paying for Insurance Using the Accrual-Basis of Accounting

question 3

True/False

9 When paying for insurance using the accrual-basis of accounting, you debit the expense account in the General Journal.

---

Definitions:

Capital Surplus

Funds received by a company from the sale of shares in excess of their stated par value, recorded as equity in the financial statements.

Par Value

A face value assigned to a share of stock by the company's charter.

Cash Flow Test

A financial analysis method used to determine the liquidity of a company by assessing its ability to generate cash to pay its short-term obligations.

Equity Insolvency Test

A method to determine if a company can meet its financial obligations as they come due without having to sell off assets.