A decrease in Prepaid Insurance is added to net income because ___________.
a) a decrease in Prepaid Insurance causes an increase in Insurance Expense and a decrease in net income, but it does not involve cash
b) it includes the impact of increasing cash and increasing net income.
c) the company paid additional premiums this period in excess of the Insurance Expense recorded on the income statement.
d) it accounts for purchasing more insurance during the period than has been expensed.