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Alberto Company Paid Its Insurance Premiums for a Two-Year Insurance

Question 8

Multiple Choice

Alberto Company paid its insurance premiums for a two-year insurance policy on May 1, 2009, and recorded them in a prepaid insurance account. The adjusting entry required at May 31, 2009, to recognize the one-month portion for the month of May will


A) increase an expense account and increase a liability account.
B) increase an expense account and decrease an asset account.
C) increase an asset account and decrease an expense account.
D) increase a revenue account and decrease an asset account.

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