Company I pays $12,000 for insurance coverage for the upcoming year. Analyze how this expense should be recognized over the course of the year, adhering to the principles of the Accounting Period and Matching Concept.

• The Accounting Period principle requires that expenses should be recognized in the period in which they are incurred, regardless of when they are paid. Therefore, the $12,000 insurance expense should be recognized evenly over the coverage period, typically one year.
• This ensures that the expense is matched with the revenue it helps to generate, adhering to the Matching Concept. As a result, $1,000 should be recognized as insurance expense each month for the next year.