Bert's Bungy Jumping,Inc.paid $650,000 cash for casualty insurance during the year 2015.If the income statement for the year reports insurance expense of $620,000 then:

Question

Quizplus · Accepted Answer

The insurance expense recognized in the income statement for the year was $620,000, which means that $620,000 of the prepaid insurance was used up during the year. The total amount paid for insurance during the year was $650,000, so the prepaid insurance balance at the end of the year would be $30,000 higher than it was at the beginning of the year. Therefore, Bert's prepaid insurance increased by $30,000 during the year.