Question

select all that apply
which of the following transactions are examples of prepayments that will require an adjustment at the end of the accounting period on december 31? (select all that apply)
□ a company pays a 6 - month insurance premium at the beginning of october.
□ a company records interest expense that has accrued, but will not be paid until next year.
□ a company pays for 4 months of advertising in the wall street journal on november 1.
□ a company pays a utility bill for charges incurred in the previous month.

Explanation:

Prepayments are payments made in advance for goods or services. The insurance premium paid in October for 6 - months and advertising paid in November for 4 - months are prepayments. The interest expense is an accrued expense and paying a utility bill for previous month is a normal payment, not a prepayment.

Answer:

A. A company pays a 6 - month insurance premium at the beginning of October.
C. A company pays for 4 months of advertising in the Wall Street Journal on November 1.