Data Ltd Uses Accrual Accounting and Its Financial Year Ends

question 48

Multiple Choice

Data Ltd uses accrual accounting and its financial year ends on 30 June.Expenses paid in advance are treated as assets.On 1 May 2016,Data Ltd pays $480 for a one-year fire insurance policy that expires on 30 April 2017.
-Which of the following will appear on Data Ltd's balance sheet at 30 June 2016?

• A) Prepaid insurance $480.
• B) Prepaid insurance $400.
• C) Prepaid insurance $80.
• D) Insurance expense $80.

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