If insurance expense is $7,000 and the beginning and ending balances of prepaid insurance are $1,500 and $2,000,respectively,the cash paid for insurance is
A)$7,000
B)$6,500
C)$5,000
D)$7,500

Question

Quizplus · Accepted Answer

The cash paid for insurance is calculated by adjusting the insurance expense with the change in prepaid insurance. The formula is: Cash Paid = Insurance Expense + Ending Prepaid Insurance - Beginning Prepaid Insurance. Therefore, $7,000 + $2,000 - $1,500 = $7,500.

If Insurance Expense Is $7,000 and the Beginning and Ending