What Is the Most Likely Source of Information for a Detailed

question 181

Multiple Choice

What is the most likely source of information for a detailed schedule of a company's insurance policies in force?

• A) Original journal entries found in the cash disbursements journal, along with supporting checks processed by the bank.
• B) Policies and procedures governing insurance coverage.
• C) The current fiscal year's budget for insurance, together with the beginning balance of the prepaid insurance account.
• D) The files containing insurance policies with various carriers.

---

Definitions:

Accrual Basis Accounting

An accounting method where revenues and expenses are recorded when earned or incurred, regardless of when the cash transactions occur.

Statement of Retained Earnings

A financial statement that shows the changes in a company's retained earnings over a specific period.

Net Income

The remaining profit of a company post deduction of all expenses, taxes, and costs from its total revenues.

Unearned Revenues

Income received by a company for goods or services to be provided in the future, which is recorded as a liability until earned.