Can you please help with the multiple choice questions below? Thanks a lot! 1.On April 1, Smart, Inc. paid $7,200 for an insurance premium on a three-year insurance policy. How does this transac

Can you please help with the multiple choice questions below?

Thanks a lot!

1.On April 1, Smart, Inc. paid $7,200 for an insurance premium on a three-year insurance policy. How does this transaction affect Smart’s accounts?

Increase insurance expense and decrease cash by $7,200 each

Increase prepaid insurance and decrease cash by $7,200 each

Increase unearned insurance and decrease cash by $7,200 each

Increase prepaid insurance and decrease retained earnings by $7,200 each

2.XYZ Co. received $3,000 in payments from clients for services billed in a previous month. Which accounts will be affected and by what amounts under the accrual basis of accounting?

Cash will increase by $3,000 and accounts receivable decrease by $3,000.

Cash will increase by $3,000 and revenues will increase $3,000.

Accounts receivable will increase by $3,000 and revenue will increase by $3,000.

Accounts receivable will increase by $3,000 and cash will increase by $3,000.

3.When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account, which section of the statement of cash flows is affected?

Cash Flow from Operating Activities

Cash Flow from Investing Activities

Cash Flow from Financing Activities

There is no effect on the statement of cash flows.

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