A company paid the ($ 1,080) premium on a three-year insurance policy on October 1,1990 . The

Question:

A company paid the $\$ 1,080$ premium on a three-year insurance policy on October 1,1990 . The policy gave protection beginning on that date.

a. Assuming the accrual basis of accounting, how many dollars of the premium will appear as an expense on the annual income statement for 1990? for 1991? for 1992? for 1993?

b. Assuming the accrual basis, how many dollars of the premium will appear as an asset on each December 31 balance sheet for 1990? for 1991? for 1992? for 1993 ?

c. Assuming the cash basis of accounting, how many dollars of the premium will appear as an expense on the annual income statement for 1990 ? for 1991? for 1992? for 1993?

d. Assuming the cash basis, how many dollars of the premium will appear as an asset on each December 31 balance sheet for 1990? for 1991? for 1992? for 1993 ?

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