On April 1, 2014, Briggs Corp. purchases a 24-month property insurance policy for $52,800. The policy is effective immediately. Assume that Briggs prepares adjustments only once a year, on December 31.

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders' Equity

Revenues

Expenses

=

Net Income

- Select your answer -Accounts ReceivableInsurance ExpenseInsurance PayableNotes PayablePrepaid InsuranceNo EntryCorrect 1 of Item 3

- Select your answer -Accounts PayableCashInsurance ExpenseInsurance PayablePrepaid InsuranceNo EntryCorrect 3 of Item 3

- Select your answer -Accounts PayableCashInsurance ExpenseInsurance PayablePrepaid InsuranceNo EntryCorrect 6 of Item 3

- Select your answer -Accounts ReceivableInsurance ExpenseInsurance PayableNotes PayablePrepaid InsuranceNo EntryCorrect 8 of Item 3

- Select your answer -Accounts PayableCashInsurance ExpenseInsurance PayableRetained EarningsNo EntryCorrect 11 of Item 3

- Select your answer -Accounts ReceivableCashInsurance ExpenseInsurance PayablePrepaid InsuranceNo EntryCorrect 13 of Item 3

- Select your answer -Accounts ReceivableCashInsurance ExpenseInsurance PayablePrepaid InsuranceNo EntryCorrect 16 of Item 3

- Select your answer -Accounts PayableCashInsurance ExpenseInsurance PayableRetained EarningsNo EntryCorrect 18 of Item 3

3. Identify and analyze the adjustment on December 31, 2014.

Activity	- Select your answer -OperatingInvestingFinancingCorrect 1 of Item 4
Accounts	- Select your answer -Prepaid Insurance Increase, Insurance Expense IncreasePrepaid Insurance Increase, Insurance Expense DecreasePrepaid Insurance Decrease, Insurance Expense IncreasePrepaid Insurance Decrease, Insurance Expense DecreaseCorrect 2 of Item 4
Statement(s)	- Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 4

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders' Equity

Revenues

Expenses

=

Net Income

- Select your answer -CashInsurance ExpenseInsurance PayablePrepaid InsuranceSuppliesNo EntryCorrect 1 of Item 5

- Select your answer -Accounts PayableCashInsurance ExpenseInsurance PayablePrepaid InsuranceNo EntryCorrect 3 of Item 5

- Select your answer -Accounts PayableCashInsurance ExpenseInsurance PayablePrepaid InsuranceNo EntryCorrect 6 of Item 5

- Select your answer -CashInsurance ExpenseInsurance PayablePrepaid InsuranceSuppliesNo EntryCorrect 8 of Item 5

4. Assume that the accountant forgets to record an adjustment on December 31, 2014. Will net income for the year ended December 31, 2014, be understated or overstated? - Select your answer -OverstatedUnderstated