Use the Information Below to Answer the Following Questions:
Data $\$ 480$

question 52

Short Answer

Use the information below to answer the following questions:
Data Ltd uses accrual accounting and its financial year ends on 30 June. Expenses paid in advance are treated as assets. On 1 May 2011, Data Ltd pays $480 for a one-year fire insurance policy that expires on 30 April 2012.
-What is the journal entry made by Data Ltd on 30 June 2011?
A. DR Prepaid insurance $\$ 480$ $\quad$ CR Cash $\$ 480$

B. DR Prepaid insurance $\$ 80$ $\quad$ CR Insurance expense $\$ 80$

C. DR Insurance expense $\$ 480$ $\quad$ CR Prepaid insurance $\$ 480$

D. DR Insurance expense $\$ 80$ $\quad$ CR Prepaid insurance $\$ 80$

Comprehend the role of declaratory judgments in resolving insurance disputes.

Distinguish between compensatory and punitive damages within insurance contracts.

Acknowledge the importance of an insurer's duty to defend and the conditions under which it may be invoked.

Analyze the impact of bad faith actions by insurers and their consequences.

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Negative Association

A negative association occurs when two variables move in opposite directions, meaning that as one variable increases, the other decreases.

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Categorical Variable

A type of variable that can take on one of a limited, and usually fixed, number of possible values, representing distinct categories or groups.