A company pays \$24,000 for a two-year insurance policy. How should the expense be recorded for the first year?

• A. \$6,000 should be recorded as an expense.
• B. \$12,000 should be recorded as an expense.
• C. \$24,000 should be recorded as an expense.
• D. \$0 should be recorded as an expense.

Answer: (B)