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On April 1, Tule, Inc. paid $3,600 for an insurance premium on a three-year insurance policy. How does this transaction affect Tule’s accounts...

Question:

On April 1, Tule, Inc. paid $3,600 for an insurance premium on a three-year insurance policy. How does this transaction affect Tule’s accounts?

a. Increase insurance expense and decrease cash by $3,600 each

b. Increase prepaid insurance and decrease cash by $3,600 each

c. Increase unearned insurance and decrease cash by $3,600 each

d. No effect at this time

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