Under the Alternative Method for Recording Prepaid Expenses,which Is the Correct

question 390

Multiple Choice

Under the alternative method for recording prepaid expenses,which is the correct set of journal entries?

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

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Definitions:

Scrambled Merchandise Stores

Retail outlets that offer a wide range of unrelated products under one roof.

Category Killer

A large retail store specializing in a particular product category, dominating the market and often driving smaller retailers out of business.

General Merchandise Store

Retail establishments offering a wide range of products from various categories including clothing, housewares, and groceries.

Value Outlet

A retail store that offers products at lower prices by reducing overhead costs and offering goods that provide value for money.