J Brown Consulting Paid $2,500 Cash for a 5-Month Insurance $\begin{array} { | c | r | r | } \hline \text { Insurance Expense } & 2,500 & \\\hline \text { Cash } & & 2,500 \\\hline\end{array}$

question 155

Multiple Choice

J. Brown Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.

• A) \(\begin{array} { | c | r | r | }
• \hline \text { Insurance Expense } & 2,500 & \\
• \hline \text { Cash } & & 2,500 \\
• \hline
• \end{array}\)
• B) \(\begin{array} { | c | r | r | }
• \hline \text { Cash } & 2,500 & \\
• \hline \text { Insurance Expense } & & 2,500 \\
• \hline
• \end{array}\)
• C) \(\begin{array} { | c | r | r | }
• \hline \text { Cash } & 2,500 & \\
• \hline \text { Prepaid Insurance } & & 2,500 \\
• \hline
• \end{array}\)
• D) \(\begin{array} { | c | r | r | }
• \hline \text { Prepaid Insurance } & 2,500 & \\
• \hline \text { Cash } & & 2,500 \\
• \hline
• \end{array}\)
• E) \(\begin{array} { | c | r | r | }
• \hline \text { Insurance Expense } & 2,500 & \\
• \hline \text { Prepaid Insurance } & & 2,500 \\
• \hline
• \end{array}\)

---

Definitions:

Balance of Payments

A comprehensive record of all economic transactions between residents of a country and the rest of the world during a specific period.

Balance-of-Economic Transactions

A record of all economic transactions between residents of a country and the rest of the world during a particular period, including trade, investments, and financial transfers.

Bretton Woods Agreement

The Bretton Woods Agreement was established in 1944 to set up a new international monetary system, creating exchange rate stability and promoting international economic cooperation.

Exchange Rates

The value of one currency expressed in terms of another currency, which determines how much foreign currency can be exchanged for a unit of domestic currency.