Sure Safe, Inc had prepaid insurance of 1,600 on January 1, 2011 from a 12-month insurance policy purchased on March 1, 2010 for 9,600. On March 1, 2011, the company bought more insurance coverage by paying 10,800 for a new one-year policy.
The company's year ends on December 31, 2011 and all adjustments for the whole year are made on that date. What amount should appear on the December 31, 2011 balance sheet as prepaid insurance? What amount of insurance expense should be reported on the income statement for the year ended December 31, 2011?
What will be an ideal response?
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Q. 2) The primary risk associated with long-term debt is the risk of not being able to make the debt payments.
Indicate whether the statement is true or false
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Q. 3) The policy of requiring an employee to alternate jobs periodically is known as _____________________________
_.
Fill in the blank(s) with correct word
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Q. 4) The statement of cash flows reports the ________.
A) sources and uses of cash
B) financial position of a company
C) changes in shareholders' equity
D) profitability of a company
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Q. 5) While sales returns and allowances can be debited directly to the sales account, it is better to debit a separate sales returns and allowances account.
a. True
b. False
Indicate whether the statement is true or false
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Q. 6) Which of following is NOT a step that should be taken to minimize risk associated with long-term debt? A company should ________.
A) conduct a thorough business analysis when a decision is made to borrow money
B) evaluate the characteristics of the various types of debt
C) make sure that there is a high probability of positive financial leverage
D) maximize its debt-to-equity ratio
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