Question: 1 0 Multiple Choice 2 points Entity A purchased a three - year insurance policy on January 1 for $ 9 , 0 0 0

10

Multiple Choice

2

points

Entity A purchased a three

-

year insurance policy on January

1

for $

9, 000

and debited it to Prepaid insurance. If Entity A does not make the proper adjusting entry at the end of the year, which of the following is correct? Hint: Make the correct adjusting entry first.

Current assets will be understated

Current assets will be unaffected

Net income will be overstated

Retained earnings will be understated

1 0 Multiple Choice 2 points Entity A purchased a

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