On April 1, Year 1, Seaside Bookstore Bought an Insurance

question 84

Multiple Choice

On April 1, Year 1, Seaside Bookstore bought an insurance policy costing $48,000 that would insure the retail building for two years against fire loss.What asset account and what amount are recorded on the balance sheet at December 31, Year 1?

• A)Prepaid Insurance, $30,000
• B)Insurance Expense, $30,000
• C)Prepaid Insurance, $18,000
• D)Insurance Expense, $18,000
• E)Insurance Expense, $9,000

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Definitions:

Security Selection

The process of choosing individual stocks or bonds to invest in, based on analysis and research, aiming to achieve better returns than the broader market.

Asset Allocation

The strategy of distributing investments among various financial categories to manage risk and optimize returns.

Investment Committee

An investment committee is a group of professionals responsible for making decisions regarding the investment strategy of an organization or fund.

Passively Managed

Investment strategies that aim to replicate the performance of a specific index or benchmark as closely as possible, without active decision-making by managers.