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WAEC Financial Accounting 1992 Question 14

Question 14

Accruals and Prepayments

A trader paid insurance premium of ₦1,350 for 15 months ended 31st March 1991. He prepares account to 31st December.

The amount carried in the Balance Sheet is classified as

  1. A.current asset
  2. B.current liability
  3. C.investment
  4. D.fictitious asset
  5. E.reserve.
Show the answer and explanation

Answer: A (current asset)

Explanation

Insurance paid in advance (a prepayment) is a current asset.