September 1, 2021, your company paid $6,000 for insurance covering Sep 2021 – March 2022. When the payment was made, you increased Insurance Expense. After 2021 books were closed, you note that Insurance Expense was not adjusted at year-end. Which of the following is true about the 2021 accounts and financial statements? 2021 Net Income was overstated by $6,000 2021 Net Income was understated by $6,000 Insurance Expense is understated by $2,000 Prepaid Insurance was understated by $2,000
September 1, 2021, your company paid $6,000 for insurance covering Sep 2021 – March 2022. When the payment was made, you increased Insurance Expense. After 2021 books were closed, you note that Insurance Expense was not adjusted at year-end. Which of the following is true about the 2021 accounts and financial statements? 2021 Net Income was overstated by $6,000 2021 Net Income was understated by $6,000 Insurance Expense is understated by $2,000 Prepaid Insurance was understated by $2,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
September 1, 2021, your company paid $6,000 for insurance covering Sep 2021 – March 2022. When the payment was made, you increased Insurance Expense. After 2021 books were closed, you note that Insurance Expense was not adjusted at year-end. Which of the following is true about the 2021 accounts and financial statements?
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2021 Net Income was overstated by $6,000 |
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2021 Net Income was understated by $6,000 |
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Insurance Expense is understated by $2,000 |
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Prepaid Insurance was understated by $2,000 |
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