When making the adjustment for prepaid insurance, instead of writing off only the time that has passed the entire policy was written off. This would
A) overstate the assets.
B) overstate the liabilities.
C) understate net income.
D) None of these are correct.

Question

Quizplus · Accepted Answer

Writing off the entire policy instead of only the time that has passed would result in an overstatement of expenses, which would ultimately lead to an understatement of net income.

When Making the Adjustment for Prepaid Insurance, Instead of Writing