Interim financial reports can be based
on one-month or three-month accounting periods
Property, plant and equipment are
referred to as plant assets
Question 18. Question :
On January 1 a company
purchased a five-year insurance policy for $1,800 with
coverage starting immediately. If the purchase was recorded
in the Prepaid Insurance account and the company records
adjustments only at year-end, the adjusting entry at the end of
the first year is:
Debit Prepaid Insurance, $1,800; credit
Cash, $1,800
Debit Prepaid Insurance, $1,440; credit
Insurance Expense, $1,440
Debit Prepaid Insurance, $360; credit
Insurance Expense, $360
Debit Insurance Expense, $360; credit
Prepaid Insurance, $360
Debit Insurance Expense, $360; credit
Prepaid Insurance, $1,440
Question 19. Question :
A company pays each of its
two office employees each Friday at the rate of $100 per day
each for a five-day week that begins on Monday. If the
monthly accounting period ends on Tuesday and the
employees worked on both Monday and Tuesday, the month-
end adjusting entry to record the salaries earned but unpaid is: