Under the Alternative Method for Recording Prepaid Expenses, Which Is

question 90

Short Answer

Under the alternative method for recording prepaid expenses, which is the correct set of journal entries?
A)
$\begin{array}{|l|l|}\hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\\hline \text { Prepaid Insurance } & \text { Cash } \\\hline \text { Insurance Expense } & \text { Prepaid Insurance } \\\hline\end{array}$
B)
$\begin{array}{|l|l|}\hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\\hline \text { Prepaid Insurance } & \text { Insurance Expense } \\\hline \text { Cash } & \text { Prepaid Insurance } \\\hline\end{array}$
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)
$\begin{array}{|l|l|}\hline{\text { Initial Entry }} & {\text { Adjusting Entry }} \\\hline \text { Insurance Expense } & \text { Prepaid Insurance } \\\hline \text { Cash } & \text { Insurance Expense } \\\hline\end{array}$
E)
$\begin{array}{|l|l|}\hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\\hline \text { Cash } & \text { Prepaid Insurance } \\\hline \text { Insurance Expense } & \text { Insurance Expense } \\\hline\end{array}$

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

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Definitions:

Interest

The cost of borrowing money, typically expressed as a percentage of the borrowed amount, paid by the borrower to the lender.

Effective Rate

The actual interest rate of an investment or loan when the compounding frequency is accounted for, giving a true reflection of the cost or yield.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.

Twins

Biologically born individuals sharing the same womb simultaneously, often characterized by a close genetic and physical similarity.