PRC-1 · Chapter 10 · Question 21 of 100
At the end of the year, a business has prepaid insurance of Rs. 12,000. Where will this appear in the financial statements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) As a current asset in the Statement of Financial Position.
Explanation
Prepaid expenses represent services paid for but not yet consumed. They provide future economic benefits within the next year and are thus classified as current assets.
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