Question

-1 On December 1..................to adjust the account is.

Correct Answer : B) Debit Insurance Expense 200; Credit Prepaid Insurance 200

Explanation: After recording prepaid expense for the entire year, we need to book the expense at the end of every
month to reduce actual expense.

To record actual expense, prepaid expenses are credited for the monthly expense and actual expenses are debited i.e.,
for 2400 /12 = 200.

Question 2 - On June 30,........................account on Auguts 1?

Correct Answer : A) 4,100 Debit

Explanation - Normal Balance of cash is a debit balance

Debit balance = $ 4,300

(+) Debited = $ 3,400

(-) Credited = $ 3,600

Balance on August 1 = $ 4100 (Debit)