- 2 Marks
FA – May 2017 – L1 – SB – Q6b – Accounting Treatment for Accruals and Prepayments
Prepare the insurance account for 2016 and state the amount for profit or loss and disclosure in financial statements.
Question
Abode Limited has an insurance policy covering April 1 to March 31 of the following year, but its accounting period ends on December 31 each year. The insurance is paid on April 1 each year, and the record of payments for the two years, 2015 and 2016, were as follows:
2015: ₦64,000
2016: ₦84,000
Required:
Show the insurance account for 2016 and state the amount to be charged in the statement of profit or loss and the disclosure in the statement of financial position as at December 31, 2016.
Find Related Questions by Tags, levels, etc.
- Tags: Accruals, Financial Statements, Insurance Account, Prepayments, Profit or Loss
- Level: Level 1
- Topic: Accruals and Prepayments
- Series: MAY 2017
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