Rent-a-Wreck, Inc. paid $12,000 cash for a one-year insurance policy on November 1, 2012. What adjustment should the company make before preparing its annual financial statements on December 31, 2012?
A) Decrease Cash and increase Prepaid insurance by $2,000.
B) Decrease Cash and recognize Insurance expense of $12,000.
C) Decrease Prepaid insurance and recognize Insurance expense of $1,000.
D) Decrease Prepaid insurance and recognize Insurance expense of $2,000.
D
Business
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During the most recent financial crisis, life insurance companies with large proportions of separate accounts business were well-protected from the decline in the debt and equity markets.
a. true b. false
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