ACC 101 03 - Principles of A
M Question 4 - Ch 3: Concept x
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0:13 beginning on December 1, Year 1.
0:16 Accrual accounting requires that $100 (or $2,400 divided by 24 months)
0.21 points
0:24 of insurance expense be reported on December Year 1, income statement.
0:30 Another $1,200 of expense is reported in Year 2,
0:35 and the remaining $1,100 is reported as expense in the first 11 months of Year 3.
0:42 Because the insurance premiums were paid in advance and cover a period of time,
0:48 those premiums expire (or are used up) as time passes.
0:53 Any unexpired (that is, unused) premium is reported as an asset on the balance sheet.
1:00 Because the payment of $2,400 was made on December 1, Year 1,
Knowledge Check 01
Aurora Corporation operated without insurance coverage for the first month of operations. Then, on Fe
$4,800 premium on a two-year insurance policy with benefits beginning on that date. The company us
insurance expense will be reported on the company's income statement for their first year ended Dece
? $200
? $2,200
? $4,600
? $4,800
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