Adjustment of prepaid insurance, Financial Management

Assignment Help:

Accountants should not reverse the adjustment of prepaid insurance to recognize insurance expense at the end of the accounting period because:

Answer

a. . doing so results in a change from accrual basis accounting to cash basis accounting.

b. . Prepaid Insurance is a liability account.

c. . Prepaid Insurance should never be adjusted.

d. . there is no transaction in the following accounting period to offset a reversing entry as there is for the accrual of assets and liabilities.


Related Discussions:- Adjustment of prepaid insurance

Explain the tests of controlor systems based auditing, Tests of controlor s...

Tests of controlor systems based auditing Tests to obtain audit evidence about effective operation of the accounting and internal control systems. It isn't concerned about deta

Calculate total development cost, A developer has purchased a commercial of...

A developer has purchased a commercial office site in Melbourne and wishes to develop a building which will be sold to an institutional owner before completion of the building.

Design, D esign, Drawing and Bill of Quantities (BOQ) for works We dis...

D esign, Drawing and Bill of Quantities (BOQ) for works We discussed about INCO terms which are set standards for the project. Now let us learn about other parameters for cont

Describes net income approach to capital structure, Q. Describes Net Income...

Q. Describes Net Income Approach to Capital Structure? Net Income Approach: - As-per to the Net Income Approach as suggested by Durand the capital structure decision is applica

Company capacity to continue trading, Company capacity to continue trading ...

Company capacity to continue trading Given the preceding discussion it is unlikely that the business can continue in its current form. The trading performance is clearly very

What is qualities of pay back method, Q. What is Qualities of Pay Back Meth...

Q. What is Qualities of Pay Back Method? Qualities of Pay Back Method:- (i) Simple: - The most important merit of this method is that it is simple to understand and easy to

Longer-term bonds and short-term bonds, Questions How is a bond like...

Questions How is a bond like a loan?                                               How does an investor receive a return from buying a bond?  Does a bond's yield to ma

Lien, A legal claim on exact assets which were used to make loan secure.

A legal claim on exact assets which were used to make loan secure.

Under what circumstances is a warrant''s value high, Under what circumstanc...

Under what circumstances is a warrant's value high ?  Explain. A warrant's value would be elevated when the stock price, time to expiration, and/or expected stock price volatil

Non-traditional mortgages, Non-traditional mortgages also referred to...

Non-traditional mortgages also referred to as Alternative Mortgage Instruments (AMIs), do not have level monthly payments, but employ some other structure of payment.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd