Respuesta :
Answer:
The corrct option is B) $16,000,000.
Explanation:
Note: This question is not complete and there is an error in its figure. The correct and complete question is therefore provided before answering the question as follows:
Fink Insurance collected premiums of $18,000,000 from its customers during the current year. The adjusted balance in the Unearned premiums account increased from $6 million to $8 million dollars during the year. What was Fink's revenues from earned insurance premiums for the current year?
A) $10,000,000.
B) $16,000,000.
C) $18,000,000.
D) $20,000,000.
The explanation to the answer is now provided as follows:
Earned insurance premium can be described as the premium that an insurance company collected for the portion of an already expired insurance policy.
On the other hand, unearned insurance premium is the premium that an insurance company collected for the portion of an insurance policy that is not expired yet.
From the question, Fink's revenues from earned insurance premiums for the current year can be calculated as follows:
Revenue for the current year = Insurance premium collected - Increase in adjusted balance in the Unearned premiums account ............ (1)
Where;
Revenue for the current year = ?
Insurance premium collected = $18,000,000
Increase in adjusted balance in the Unearned premiums account = $8,000,000 - $6,000,000 = $2,000,000
Substitutiting the vlalues into equation (1), we have:
Revenue for the current year = $18,000,000 - $2,000,000 = $16,000,000
Therefore, Fink's revenues from earned insurance premiums for the current year is $16,000,000 and the correct option is B) $16,000,000.
