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