Use the following information to answer this qu... - WAEC Accounting 2016 Question
Use the following information to answer this questions.
Rent prepaid - 1/01/2014 - N600
Rent paid - 31/12/2014 - N3,000
Rent prepaid - 31/12/2014 - N400.
The balance sheet as at 31st December 2014 will show
A
Current asset of N600
B
Current asset of N400
C
Current liability of N400
D
Current asset of N600
correct option: b
Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired.
N400 is the only future expense that would still be viable at the end of the accounting year. The N400 represents current assets which are expected to be used or converted to cash within the year.
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