Question : 11) Prepaid rent a(n) ________. A) expense representing rent used up : 1253161

11) Prepaid rent is a(n) ________.

A) expense representing rent used up during the period

B) liability representing an obligation to pay for rent

C) part of shareholders’ equity

D) asset representing rent that has been paid but not used

12) Rent-a-Wreck, Inc. paid $36,000 cash for a two-year insurance policy on April 1, 2011. What adjustment should the company make before preparing its annual financial statements on December 31, 2011?

A) Decrease Cash and increase Prepaid insurance by $36,000.

B) Decrease Prepaid insurance and recognize Insurance expense of $18,000.

C) Decrease Prepaid insurance and recognize Insurance expense of $13,500.

D) Decrease Cash and recognize Insurance expense of $13,500.

13) Rent-a-Wreck, Inc. paid $36,000 cash for a one-year insurance policy on July 1, 2011. What adjustment should the company make before preparing its annual financial statements on December 31, 2011?

A) Decrease Cash and increase Prepaid insurance by $18,000.

B) Decrease Prepaid insurance and recognize Insurance expense of $18,000.

C) Decrease Prepaid insurance and recognize Insurance expense of $36,000.

D) Decrease Cash and recognize Insurance expense of $18,000.

14) 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.

15) Rent a Wreck, Inc. began operations on July 1, 2012. On July 1, the company paid $9,600 cash in advance for a one-year insurance policy beginning on that day. How much insurance expense will appear on the company’s income statement for the month ended July 31, 2012?

A) $800

B) $9,600

C) $4,800

D) $8,800

16) Rent a Wreck, Inc. began operations on July 1, 2012. On July 1, the company paid $9,600 cash in advance for a one-year insurance policy beginning on that day. How much insurance expense will appear on the company’s income statement for the year ended December 31, 2012?

A) $800

B) $9,600

C) $4,800

D) $8,800

17) Rent a Wreck, Inc. began operations on July 1, 2012. On July 1, the company paid $9,600 cash in advance for a one-year insurance policy beginning on that day. What will the company report for prepaid insurance on its balance sheet at December 31, 2012?

A) $800

B) $9,600

C) $4,800

D) $8,800

18) Rent a Wreck, Inc. began operations on July 1, 2012. On July 1, the company paid $9,600 cash in advance for a one-year insurance policy beginning on that day. What will the company report for prepaid insurance on its balance sheet at July 31, 2012?

A) $800

B) $9,600

C) $4,800

D) $8,800

19) Rent a Wreck, Inc. began operations on July 1, 2012. On July 1, the company paid $9,600 cash in advance for a one-year insurance policy beginning on that day. Cash paid for insurance on the company’s statement of cash flows for the month ended July 31, 2012 equals ________.

A) $(800)

B) $(9,600)

C) $(4,800)

D) $(8,800)

20) Fair Play, Inc. paid $3,600 on September 1, 2011 for an 18-month insurance policy beginning on that day. The company recorded the entire amount as prepaid insurance. How much insurance expense should the company show on its income statement for the year ended December 31, 2011?

A) $200

B) $600

C) $800

D) $3,600