The Cost of Insurance Is Considered an Expense

question 130

Multiple Choice

The cost of insurance is considered an expense:

• A)Only when the entire policy period has passed.
• B)Only when the policy is purchased.
• C)Only when the premium is paid.
• D)Evenly over the term of the policy.

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Definitions:

Account Receivable

Debts owed by clients to a company for products or services provided on a credit basis.

Cash

Coins, currency (paper money), checks, money orders, and money on deposit that is available for unrestricted withdrawal from banks and other financial institutions.

Internal Control System

A set of procedures and mechanisms implemented by a business to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Cash Receipts

The collection of money, typically in the form of cash or checks, received by a business during its operating activities.