The premium on a three-year insurance policy expiring on December 31, Year 3 was paid in total on January 2, Year 1. If the company has a six-month operating cycle, then on December 31, Year 1, the prepaid insurance reported as a current asset would be for:
　　a.24 months.
　　b.6 months.
　　c.18 months.
　　d.12 months.
　　Answer：D
　　Choice "D" is correct. The minimum operating cycle for purposes of reporting a "prepaid" current asset is one year (or 12 months).Choices "b", "c", and "a" are incorrect. (Only) one year of a prepaid item such as insurance which may be prepaid for the next 2 years would be reported as "current."