A. Current Asset
B. Current Liability
C. Fixed Asset
D. Income
Prepaid insurance is the expense relating to the next accounting period but has been
paid in the current accounting period and hence it is a current asset. The adjustment would be to
deduct it from the respective expense account in the P&L A/c and show it as a current asset in the
Balance Sheet.
Related Mcqs:
- A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case
A. P&L A/C is debited with 1,400
B. P&L A/C is debited with 1,200
C. 200 is shown as current asset
D. Both B. and C. above - The adjustment to be made for prepaid expenses is____________?
A. Add prepaid expenses to respective expenses and show it as an asset
B. Deduct prepaid expenses from respective expenses and show it as an asset
C. Add prepaid expenses to respective expenses and show it as a liability
D. Deduct prepaid expenses from respective expenses and show it as a liability - Prepaid expenses are valued on the Balance Sheet at
A. Replacement cost
B. Current cost
C. Cost to acquire less accumulated amortization
D. Cost less expired portion - Goods in stock worth 800 are destroyed by fire and the Insurance Co. is accepted the claim for 600. Adjustment would involve
A. Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and
Profit and Loss Account respectively
B. Deduct the 800 from closing stock in the Trading Account
C. Credit insurance company for 600
D. Debit of 600 and 200 to insurance company and Profit and Loss Account respectively and
credit of 800 to Trading Account - If unexpired insurance appears in the Trial Balance, it should be:
A. Credited to the Profit & Loss Account
B. Debited to the Profit & Loss Account
C. Shown on the liabilities side of the Balance Sheet
D. Shown on the assets side of the Balance Sheet - Carriage on goods purchased is shown in:___________?
A. Profit and Loss A/c
B. Capitalized with work in progress
C. Trading A/c
D. Shown in Balance Sheet - Which of the following account with normal balance is shown at the debit side of a trial balance?
A. Rent income account
B. Creditors account
C. Unearned income account
D. Cash account - Outstanding salaries is shown as___________?
A. An Asset in the Balance Sheet
B. A Liability
C. By adjusting it in the P & L A/c
D. Both B. and C. above - Based on which of the following concepts, is Share Capital Account shown on the liabilities side of a Balance Sheet?
A. Business entity concept
B. Money measurement concept
C. Going concern concept
D. Matching concept - Depreciation Account appearing in the Trial Balance is shown in:
A. Profit and Loss A/c
B. Trading A/c
C. Deducted from the concerned assets A/c
D. Shown on the liability side
