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The following information relates to questions 37, 38, and 39: DEF Cous accrual basis accounting. It pays $15,000 to cover a 3-year insurance pre- mium and debits "insurance expense." One (1) year has elapsed. 37. How much insurance expense has DEF Co. incurred this year? a. $15,000 d. $0 b. $10,000 c. $5,000 38. How much has DEF Co. paid for insurance this year? a. $15,000 b. $10,000 c. $5,000 d. $0 39. What is the adjusting journal entry (omitting dollars) after 1 year? a. Insurance Expense Cash To record prepaid insurance c. Prepaid Insurance Insurance Expense To record prepaid insurance b. Insurance Expense Prepaid Insurance To record prepaid insurance d. Prepaid Insurance Cash To record prepaid insurance 40. What type of account is Prepaid Insurance? a. asset b. liability c. revenue d. expense 41. Your company buys office supplies and debits Supplies On Hand for $10,000. At year end, you estimate that you used $4,000 of these supplies What is the expense for supplies used? a. $10,000 b. $6,000 c. $4,000 d. $0 42. Generally, an adjusting journal entry... a is used in both accrual basis and cash basis accounting. b. affects both the income statement and the balance sheet. c. affects only the income statement. d. affects only the balance sheet

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