Asked by Latyrus Edwards on Apr 26, 2024
Verified
If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.
Expired Insurance
Refers to insurance policies where the coverage period has ended and has not been renewed or extended.
Assets
Resources owned or controlled by a business, entity, or individual, which are expected to produce economic value or future benefits.
Adjusting Entry
A journal entry made in accounting records at the end of an accounting period to allocate income and expenditure to the appropriate period.
- Uncover the numerous classifications and rationales of adjusting entries in accounting, covering accrued revenues, accrued expenses, deferred revenues, and prepaid expenses.
- Comprehend the importance of adjusting entries in accurately reporting a company’s financial position and performance.
- Acknowledge the role and impact of discrepancies in adjusting entries on financial accounts.
Verified Answer
CS
Christian SalcedoMay 02, 2024
Final Answer :
False
Explanation :
If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be overstated because the prepaid insurance (an asset) would not be reduced to reflect the amount that has expired.
Learning Objectives
- Uncover the numerous classifications and rationales of adjusting entries in accounting, covering accrued revenues, accrued expenses, deferred revenues, and prepaid expenses.
- Comprehend the importance of adjusting entries in accurately reporting a company’s financial position and performance.
- Acknowledge the role and impact of discrepancies in adjusting entries on financial accounts.