Multiple choice

Prepaid insurance appearing in the Trial Balance is shown

  1. on the credit side of Trading Account

  2. on the assets side of Balance sheets

  3. on the credit side of Profit & Loss Account

  4. none of these

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Prepaid insurance represents a payment made in advance for future coverage, which is an asset since the company has not yet received the benefit. Assets are always shown on the assets side of the balance sheet, not in trading or profit and loss accounts. Option B is correct.

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