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On May 1 2020, Desa Petaling Cleaning Services paid $1,200 for a one-year fire insurance policy...

On May 1 2020, Desa Petaling Cleaning Services paid $1,200 for a one-year fire insurance policy beginning May 1. The payment was recorded as Debit in Prepaid Insurance. On May 31 the account shows a balance of $1,200. Each month insurance expires $100 (i.e., $1,200 ÷ 12 months). Based on this information, answer the following questions:

i. Make the necessary journal entries for the above transaction in complying with the concept of revenues and expenses recognition.

ii. How does accrual basis of accounting relate to assumption accounting of time period in the context of recognizing revenues and expenses?

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