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WAEC Financial Accounting 2002 Question 43

Question 43

Accruals and Prepayments

A trader paid insurance premium of N45,000 for 15 months ended 31st March, 2000. He prepares account to 31st December.
How much is charged to Profit and Loss account for the year 2000?

  1. A.N45,000
  2. B.N42,000
  3. C.N36,000
  4. D.N33,000
Show the answer and explanation

Answer: C (N36,000)

Explanation

45,000 ÷ 15 = 3,000 a month; 12 months for the year = N36,000.