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WAEC Financial Accounting 2002 Question 45

Question 45

Accruals and Prepayments

A trader paid insurance premium of N45,000 for 15 months ended 31st March, 2000. 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.capital
  4. D.long-term liability
Show the answer and explanation

Answer: A (current asset)

Explanation

Insurance paid in advance is a prepayment, a current asset.