TE 3 Name: Section: Date: QUESTIONS AND PROBLEMS 1. Receipt of advanced payments. (Obj. 1) On May 1, 20x1, an insurance company sells a three-year insurance policy to one of its customers. The cost of the premiums is $1,200. The insurance company uses the accrual basis and a calendar year. 2. What amount of the $1,200 must the company include in its gross income over the term of the policy (20x1 - 20x4)? b. Would your answer change if the company used the cash basis? Explain