Dallas Company collected $12, 350 in interest during 2016. Dallas showed $1, 850 in interest receivable on its December 31, 2016, balance sheet and $5, 300 on December 31, 2015. The interest revenue on the income statement for 2016 was a. $8, 900. b. $14, 200. c. $12, 350. d. $3, 450. State Company paid $24, 900 in insurance premiums during 2017. State showed $3, 600 in prepaid insurance on its December 31, 2017, balance sheet and $4, 500 on December 31, 2016. The insurance expense on the income statement for 2017 was a. $25, 800. b. $16, 800. c. $24, 000. d. $33, 000. The SEC was given the power to establish accounting principles including setting requirements for details shown on financial statements by the: a. Congress b. FASB c. AICPA d. AAA If an inventory account is understated at year end, the effect will be to overstate the a. gross margin. b. cost of goods sold. c. cost of goods available for sale. d. net purchases Getty Company paid $1, 704 on June 1, 2017, for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2017, adjusting entry is a. debit Insurance Expense and credit Prepaid Insurance, $497. b. debit Insurance Expense and credit Prepaid Insurance, $1, 207. c. debit Prepaid Insurance and credit Insurance Expense, $497. d. debit Prepaid Insurance and credit Insurance Expense, $1, 207 On June 30, a company paid $3, 600 for insurance premiums for the current year and debited the amount to Prepaid Insurance. At December 31, the bookkeeper forgot to record the amount expired. The omission has the following effect on the financial statements prepared December 31: a. overstates owners' equity b. overstates assets. c. understates net income. d. overstates both owners' equity and assets