Accounting Mcqs

Q.  If unexpired insurance appears in the Trial Balance, it should be:

a. Credited to the Profit & Loss Account
b. Debited to the Profit & Loss Account
c. Shown on the liabilities side of the Balance Sheet
d. Shown on the assets side of the Balance Sheet


ANSWER: See Answer
 
Unexpired insurance or prepaid insurance must be shown on the assets side of the Balance Sheet, because it is an asset. It cannot be shown on the liabilities side of the Balance Sheet. It cannot be debited to Profit & Loss A/c. Also it cannot be credited to Profit & Loss A/c. Hence D. is true.
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