A Two-Year Insurance Policy Paid for on L July Would

question 31

Multiple Choice

A two-year insurance policy paid for on l July would initially be recorded in an asset account called:

• A) debtors.
• B) prepaid insurance.
• C) insurance payable.
• D) unearned insurance.

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Definitions:

Trading Securities

Financial instruments that are purchased primarily for selling in the near term with the intention of generating profit from short-term price fluctuations.

Fair Value

The amount one would get from selling an asset or the cost to transfer a liability during a well-structured deal between participants in the market at the time of evaluation.

Profit Margin

A financial metric that evaluates a company's profitability by comparing net income to sales.

Total Asset Turnover

Total asset turnover is a financial ratio that measures a company's efficiency in using its assets to generate sales, calculated as sales divided by total assets.