1. On April 1, Smart, Inc. paid $7,200 for an insurance premium on a three-year insurance policy....
Question:
1. On April 1, Smart, Inc. paid $7,200 for an insurance premium on a three-year insurance policy. How does this transaction affect Smart's accounts?
a. Increase prepaid insurance and decrease cash by $7,200 each
b. Increase prepaid insurance and decrease retained earnings by $7,200 each
c. Increase insurance expense and decrease cash by $7,200 each
d. Increase unearned insurance and decrease cash by $7,200 each
2)
A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M's accounts?
a. Increase accounts receivable and revenues by $1,000,000 each
b. Increase accounts receivable and cash by $1,000,000 each
c. Increase accounts receivable and unearned revenues by $1,000,000 each
d. Increase cash and decrease accounts receivable by $1,000,000 each