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WAEC Financial Accounting 1993 Question 40

Question 40

Accruals and Prepayments

Income received in advance is shown in the Balance Sheet as

  1. A.Current Asset
  2. B.Intangible Asset
  3. C.Tangible Asset
  4. D.Long term liability
  5. E.Current Liability.
Show the answer and explanation

Answer: E (Current Liability.)

Explanation

Income received for a later period is owed back as a service, so it is a current liability.