PRC-1 · Chapter 4 · Question 93 of 100
Opening prepaid insurance was Rs. 4,000. Cash paid for insurance during the year was Rs. 18,000. The ending balance of prepaid insurance is Rs. 5,000. What is the insurance expense for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 17,000
Explanation
Expense = Opening Prepayment (4,000, expired this year) + Cash Paid (18,000) - Closing Prepayment (5,000, pushed to next year) = Rs. 17,000.
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