On March 1,Hoffman Paid in Advance for Four Months' Insurance

question 5

Multiple Choice

On March 1,Hoffman paid in advance for four months' insurance.The necessary adjusting entry at March 31 includes which of the following?

• A)A credit to Prepaid Insurance for $2,340.
• B)A credit to Prepaid Insurance for $780.
• C)A debit to Prepaid Insurance for $2,340.
• D)A debit to Prepaid Insurance for $780.

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Definitions:

Profit-Maximizing Number

The output level at which a firm achieves the highest possible profit, determined by revenue and cost structures.

Shutdown Quantity

The amount of output at which a company's revenue just covers its variable costs, prompting it to cease operations temporarily if prices fall below this level.

Monopolistically Competitive

This refers to a market structure where many companies sell products that are similar but not identical, allowing for some degree of market power and product differentiation.

Economic Profit

The difference between a firm's total revenues and its opportunity costs, representing the additional gain over what could have been earned in the next best alternative.