In December 2016,Kojak Insurance Co.received $500,000 in premiums for a two-year property insurance policy.The company recorded the transaction by debiting cash and crediting insurance premium revenue for the full amount.An internal audit conducted in early 2017 flagged this transaction.The appropriate accounting treatment is that:

Question

Quizplus · Accepted Answer

Kojak needs to correct an accounting error because the revenue should have been recognized over the period of the insurance coverage, not all at once.