An Entity's Financial Year Ends on 30 June 2013

question 35

Multiple Choice

An entity's financial year ends on 30 June 2013.On 1 March 2013 it pays a 12 months insurance premium of $12 000.Under the accrual system of accounting how much of the premium will be recognised as an expense for the year ended 30 June 2013 and how much will be treated as an asset prepaid insurance?

• A)$9000 expense and $3000 prepaid insurance
• B)$4000 expense and $8000 prepaid insurance
• C)$8000 expense and $4000 prepaid insurance
• D)$3000 expense and $9000 prepaid insurance

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