Arrington Company's net income is about $2.0 million a year. Arrington charges to expense all property insurance premium...
Arrington Company's net income is about $2.0 million a year. Arrington charges to expense all property insurance premiums when paid. Last year approximately $3,500 of the premiums represented amounts applicable to future years. Is this proper? Why or why not?
Homework Answers
This is not proper, since this is in violation of matching principle.
Matching principle requires that expenditure shall be matched to the revenues in the year they are earned.
So $3500 amounts applicable to future years shall be booked as expenditure in the future years.
During current year they shall be shown as current assets.
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Arrington Company's net income is about $2.0 million a year. Arrington charges to expense all property insurance premium...
Exercise: Combined Ratio 1. Granite Insurance Company had claims and expenses of $425 million last year....
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4. Investment interest expense which is disallowed because it exceeds the taxpayer's net investment income may...
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Last year, Apple Inc. had net income of $129 million and paid out $38.7 million in...
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Cadux Candy Company's income statement for the year ended December 31, 2021, reported interest expense of...
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1. Record the entry for insurance expense if, on July 1, 2018, a two-year insurance premium...
1. Record the entry for insurance expense if, on July 1, 2018, a
two-year insurance premium on equipment in the amount of $504 was
paid and debited in full to Prepaid Insurance on that date.
Coverage began on July 1.
2. Record the entry for supplies expense if, at the end of 2018,
the unadjusted balance in the Supplies account was $1,000. A
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3....
Please help! Megan Corporation's net income last year was $99,000. Changes in the company's balance sheet...
Please help!
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Exercise: Combined Ratio 1. Granite Insurance Company had claims and expenses of $425 million last year. The company's premium income was $450 million. What was the company's combined ratio? Granite Insurance Company's combined ratio two years ago was 1.035. A review of that year's financial statements showed the company paid $4.5 million in income taxes. Why was the company required to pay income taxes when its underwriting activities produced a loss?
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1. Record the entry for insurance expense if, on July 1, 2018, a
two-year insurance premium on equipment in the amount of $504 was
paid and debited in full to Prepaid Insurance on that date.
Coverage began on July 1.
2. Record the entry for supplies expense if, at the end of 2018,
the unadjusted balance in the Supplies account was $1,000. A
physical count of supplies on December 31, 2018, indicated supplies
costing $260 were still on hand.
3....
Please help!
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