Question 12
Accruals and PrepaymentsA trader paid insurance premium of ₦1,350 for 15 months ended 31st March 1991. He prepares account to 31st December.
How much is charged to the profit and Loss Account for 1990?
- A.₦1,350
- B.₦1,080
- C.₦338
- D.₦270
- E.₦90.
Show the answer and explanation
Answer: B (₦1,080)
Explanation
₦1,350 ÷ 15 = ₦90 a month; 1990 has 12 months: ₦1,080.