passwella.
Menu

WAEC Financial Accounting 2016 Question 18

Question 18

Accruals and Prepayments

Use the following information: Rent prepaid 1/01/2014 ₦600; Rent paid 31/12/2014 ₦3,000; Rent prepaid 31/12/2014 ₦400.
The balance sheet as at 31st December, 2014 will show

  1. A.current asset of ₦600.
  2. B.current asset of ₦400.
  3. C.current liability of ₦ 400.
  4. D.current asset of ₦600
Show the answer and explanation

Answer: B (current asset of ₦400.)

Explanation

Rent paid in advance at the year end (₦400) is a prepayment, shown as a current asset.