Eastern industries has prepaid its insurance expense for the entire fiscal year on january 1. under the cash basis of accounting eastern will

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Business

Jesus Mitchell

26 July, 01:34

Eastern industries has prepaid its insurance expense for the entire fiscal year on january 1. under the cash basis of accounting eastern will

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Shea Moses · Answer 1

Under the cash basis of accounting, the prepayout for the insurance for the year on January 1st should be recorded as such ie with the payout amount entered in the record for that date. The cash basis accounting method only records transactions when cash is payed out or received.