Question
On March 1, 2009, the premium on a two-year insurance policy on equipment was paid amounting to $1,800. How would the financial position as of
On March 1, 2009, the premium on a two-year insurance policy on equipment was paid amounting to $1,800. How would the financial position as of December 31, 2009 (the end of the accounting period) be affected if the accountant did not record the adjusting entry?
Select one:
a. No accounts will be affected.
b. Assets overstated by $750; Liabilities unaffected; Owners' equity overstated by $750.
c. Assets understated by $750; Liabilities unaffected; Owners' equity understated by $750.
d. Assets understated by $1,500; Liabilities unaffected; Owners' equity understated by $750.
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