Which of the Following Accounts Is Adjusted with a Credit

question 48

Multiple Choice

Which of the following accounts is adjusted with a credit for the amount of expired insurance at the end of an accounting cycle?

• A) Insurance Expense account
• B) Insurance Payable account
• C) Prepaid Insurance account
• D) Insurance Receivable account

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Definitions:

Times Interest Earned Ratio

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.

Callable Bonds

A type of financial instrument that allows the issuer to buy them back prior to the expiration date, for a pre-determined price.

Bond Indenture

A legal contract specifying the terms and conditions under which a bond is issued, including interest payments and repayment at maturity.

Fiscal Year

A twelve-month period used for accounting and financial reporting purposes, which may or may not align with the calendar year.