A Company Made the Following Entry on January 1, Year $$\begin{array} { | l | l | l | } \hline \text { Insurance expense } & 36,000 & \\\hline \text { Cash } & & 36,000 \\\hline\end{array}$$

question 88

Multiple Choice

A company made the following entry on January 1, year 1, to record the total premium paid for a three-year insurance policy: $$\begin{array} { | l | l | l | } \hline \text { Insurance expense } & 36,000 & \\\hline \text { Cash } & & 36,000 \\\hline\end{array}$$ The December 31, year 1, balance sheet should report the following amounts: $\begin{array}{|l|l|l|}\hline &\text { Prepaid Insurance } & \text { Deferred Charge } \\\hline1& \$ 24,000 & \text { None } \\\hline 2&\text { None } & \$ 12,000 \\\hline3& \$ 12,000 & \text { None } \\\hline 4&\$ 12,000 & \$ 12,000 \\\hline\end{array}$

• A) Choice 1
• B) Choice 2
• C) Choice 3
• D) Choice 4

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Definitions:

Trade Pattern

The general flow of import and export transactions between countries or regions.

Exports

Goods or services sent from one country to be sold or used in another country.

Opportunity Cost

The abandonment of gains that might have come from different options when a particular choice is prioritized.

Crude Oil

A naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials.