Which of the Following Is the Proper Adjusting Entry, Based

question 185

Multiple Choice

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?

• A) debit Insurance Expense, $3,000; credit Prepaid Insurance, $3,000
• B) debit Insurance Expense, $14,000; credit Prepaid Insurance, $14,000
• C) debit Prepaid Insurance, $11,000; credit Insurance Expense, $11,000
• D) debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000

---

Definitions:

Qualified Residence

A primary or secondary home that meets certain IRS criteria, allowing for potential mortgage interest deductions.

Deduction

An expense that can be subtracted from gross income to reduce the amount of income subject to income tax.

Taxpayer's Principal Residence

The primary dwelling a taxpayer lives in for a major portion of the year, which can qualify for certain tax benefits like the mortgage interest deduction.

Standard Business Mileage

The set rate per mile the IRS allows for deduction when an individual uses their personal vehicle for business purposes.