Answer:
$4,000
Explanation:
The accrual concept is of the opinion that expense should be recognized when incurred and not necessarily when the expense is paid for.
The insurance payment made was for two years, hence, at the end of the first year ended 31 December, which is the 8 months after the payment has been made, hence, 8-month insurance expense would be recognized in the first year.
May 1-December 31=8 months
insurance expense=two-year payment*8 months/2 years
insurance expense=$12,000*8/24
insurance expense for the first year=$4,000
