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WAEC Financial Accounting 2002 Question 44

Question 44

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 carried in the Balance Sheet at 31st December, 2000?

  1. A.N45,000
  2. B.N12,000
  3. C.N9,000
  4. D.N4,500.
Show the answer and explanation

Answer: C (N9,000)

Explanation

3 months paid in advance × 3,000 = N9,000 prepaid.