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WAEC Financial Accounting 2009 Question 37

Question 37

Accruals and Prepayments

Prepayment is treated in the balance sheet of a firm as a

  1. A.fixed asset
  2. B.long-term liability
  3. C.current asset
  4. D.current liability
Show the answer and explanation

Answer: C (current asset)

Explanation

A prepayment is a benefit still to be received within the year, so it is a current asset.