Snowden Company Purchased a 2 Year Insurance Policy on March

question 97

Multiple Choice

Snowden Company purchased a 2 year insurance policy on March 31 for $6,000 and charged the entire amount to Insurance Expense.The adjusting entry on December 31 will include ________.

• A)a credit to Insurance Expense for $3,750
• B)a credit to Prepaid Insurance for $3,750
• C)a debit to Insurance Expense for $2,250
• D)a credit to Cash for $2,250

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Definitions:

Excise Taxes

Taxes imposed on specific goods or services, such as tobacco, alcohol, and gasoline, usually intended to discourage their use or generate revenue.

Federal Tax Revenue

The income collected by the federal government from taxes, including income taxes, payroll taxes, and corporate taxes, used to fund public services and obligations.

Tax Rates

The rate at which a person or business is required to pay taxes to the authorities.

K-12 Public Education

The publicly funded education system in the United States that covers kindergarten through 12th grade.