Hoosher Enterprises Purchased an 18-Month Insurance Policy on May 31

question 56

Multiple Choice

Hoosher Enterprises purchased an 18-month insurance policy on May 31, 2022 for $10,800.The December 31, 2022 balance sheet would report Prepaid Insurance of:

• A)$0 because Prepaid Insurance is reported on the Income Statement.
• B)$4,200.
• C)$6,600.
• D)$10,800.

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Definitions:

Individual Asset

A singular item of value owned by an entity, such as cash, investments, equipment, or property.

Liability

an obligation or debt that a company or individual has, typically arising during the course of business operations.

Owner's Equity

Owner's Equity, also known as proprietor’s equity, is the residual claim against the assets of a business after all liabilities are paid. It represents the owner’s investment in the business.

Decrease

A reduction in quantity, size, or intensity of something, often reflected in financial metrics and asset values.