On September 1, 20X8, your calendar year company pays $2,400 for 12 months’ insu

Question

On September 1, 20X8, your calendar year company pays $2,400 for 12 months’ insurance, recording the amount as an expense. Just before closing the books, you realize that no adjusting entry was recorded. Without it, assets will be overstated and net income will be understated assets will be overstated and net income will be overstated the financial statements will be accurate because no adjusting entry was necessary assets will be understated and net income will be understated assets will be understated and net income will be overstated

Explanation / Answer

Insurance expense needs to be written back for 8 months Assets will be understated and net income will be understated

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