Question

Which of the following statements is true based on the given information?

1) The company has earned $800 of interest revenue for the year ended December 31.
2) The supplies account had a $200 debit balance at the beginning of the year.
3) The company will pay the interest expense five days after the year-end on January 5.
4) The prepaid insurance account had a $1,600 balance at the beginning of the year.

Answer 1

The prepaid insurance account had a $1,600 balance at the beginning of the year.

Step-by-step explanation:

The correct statement based on the given information is:

1. The prepaid insurance account had a $1,600 balance at the beginning of the year.

Option 1 states that the company earned $800 of interest revenue for the year ended December 31. However, there is no information provided about the company's interest revenue, so this statement cannot be confirmed. Option 2 states that the supplies account had a $200 debit balance at the beginning of the year, but this information is not relevant to the given information. Option 3 states that the company will pay the interest expense five days after the year-end on January 5, but there is no information provided to support or refute this statement.