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Financial Forensics · End Term · 21 Dec 2025 · September 2025 term

Question 24: On April 1, 2024, the premium on a one-year insurance po…

Question 24

+1 markOne correct option

On April 1, 2024, the premium on a one-year insurance policy was purchased for $2,700 cash with the insurance coverage beginning on that date. The books are adjusted only at year-end. Which of the following correctly describes the effect on the financial statements of the December 31, 2024 adjusting entry?

  1. A

    Insurance expense will increase by $675.

  2. B

    Prepaid insurance will decrease by $675.

  3. C

    Prepaid insurance will increase by $2,025.

  4. D

    Insurance expense will increase by $2,025.

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Correct answer

  • D

    Insurance expense will increase by $2,025.

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Question 24 of 40 in the IIT Madras BS Financial Forensics (Financial Forensics) End Term paper sat on 21 Dec 2025, in the September 2025 term (Financial Forensics 18 Dec 25). It carries 1 mark.

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